OPEC+ ministers began a meeting in Vienna this Sunday to try to find a way out of the fall in oil prices, with the key being a possible further reduction in production, in a context of tensions between Moscow and Riyadh. The thirteen members of the Organization of the Petroleum Exporting Countries (OPEC), which had already met on Saturday under the auspices of Saudi Arabia, were joined by its ten partners led by Russia.
This meeting, the second in the Austrian capital since March 2020, began in the early afternoon, some three hours after the initial programme, a source familiar with the discussions told AFP, referring to a cut of one million euros. barrels per day among the options under discussion. However, the outcome of the meeting remains highly uncertain. The representatives of the different countries kept silent about their intentions when they arrived at the cartel’s headquarters, where a crowd of journalists was waiting for them.
ghost of the recession
True to form, Saudi Prince Abdelaziz bin Salman was content to comment on the day’s weather, dodging questions from reporters. His Emirati counterpart, Souhail ben Mohammed Al-Mazrouei, said without further details “to wait impatiently for a decision that will balance the market.”
While oil has raised the bar in the last two sessions, prices have fallen by around 10% since the surprise announcement in early April by some OPEC+ members of a drastic cut in quotas. In fact, this measure has failed to raise prices in a depressed market due to fears of a global economic recession, rate hikes by the main central banks and the laborious recovery of demand in China as it exits anti-Covid restrictions. .
Brent, the benchmark for crude oil in Europe, is currently trading at $76 a barrel, and its US equivalent, WTI, at $71, far from the peaks recorded in March 2022 at the start of the conflict in Ukraine (almost $140). . Given the economic pessimism, “the probability of a new cut has increased considerably,” Giovanni Staunovo of UBS told AFP.
If you continue to bet on the status quo despite everything, other analysts, such as Yousef Alshammari of CMarkits, have changed their forecasts. Alshammari now expects “Saudi Arabia to push for a cut of at least half a million barrels per day.”
Maintain a “united front”
It remains to be seen if Ryad will be able to convince the other pillar of the group, Russia, which seems reluctant to tighten the floodgates of the black gold even more: the manna is used to finance its military offensive against Ukraine. Russian Deputy Prime Minister Alexander Novak, present in the Austrian capital, “does not see the need for OPEC+ to change course,” Barbara Lambrecht of Commerzbank stressed in a note. Because Moscow would hardly benefit from an increase in prices.
Due to Western sanctions, only Russian oil priced at $60 or less can continue to be delivered. Beyond this limit, it is prohibited for companies to provide services that allow maritime transport (freight, insurance, etc.).
Despite these differences, “the two main producers of the cartel will undoubtedly want to maintain a united front to preserve their influence,” he believes. During their last big disagreement in March 2020, Russia refused to cut its production to support prices driven into the abyss by the Covid-19 pandemic.
The Saudi kingdom then flooded the market with oil, causing prices to fall permanently. “Saudi Arabia does not want this scenario to happen again, neither does Russia,” argues Yousef Alshammari.
Source: BFM TV
