Officials from the OPEC countries and their allies on Wednesday agreed to continue to supply a modest amount of additional oil to an increasingly tight market, a move that could add fresh uncertainty to the oil market. energy market.
Oil prices rose after the meeting, reaching nearly $90 a barrel for Brent crude, the international benchmark. Prices have risen about 14% this year alone, fueling inflation and raising the cost of living for consumers around the world, including in the United States.
OPEC and its allies, known as OPEC Plus, have tightly controlled output throughout the pandemic due to sluggish demand. However, new questions arise, including the possibility that Russia will invade Ukraine and the possibility of a new nuclear deal with Iran that would allow it to start selling oil on the market.
Analysts at Goldman Sachs warned in a post-meeting note that “the combination of rising geopolitical tensions (Ukraine and Iran) and prices approaching politically sensitive levels is likely to ability to increase volatility”.
Normally, such conditions can boost expectations that OPEC Plus will seek a substantial increase in production.
However, the oil ministers decided to stick to the plan laid out in July of increasing production next month by a relatively modest 400,000 bpd.
But OPEC Plus has constantly falling into the lack of goals in recent months, and so analysts say the result could be an addition of about 250,000 bpd, or about a quarter of global demand.
At this point, Saudi Arabia, still a key decision maker in OPEC Plus, seems to have no reason to move away from this cautious plan. The Saudis are pleased to see an increase in oil revenues adding to their wealth, and they could argue that geopolitical tensions may be distorting the market.
Richard Bronze, head of geopolitics at Energy Aspects, said: “While attention is focused on other topics and they can say that at least some of this price increase is due to stress. geopolitics, they can avoid difficult discussions,” said Richard Bronze, head of geopolitics at Energy Aspects. company, referring to Saudi Arabia.
Saudi Arabia may also be worried that Iran, a potentially significant source of additional supply, could start putting more oil on the market later this year. Oil analysts are growing increasingly optimistic that an agreement can be reached in the coming months between Tehran and Washington over Iran’s nuclear program, leading to the lifting of some sanctions that are hurting operations. oil sales of the Islamic Republic.
What Saudi Arabia will need to ease is the subject of much speculation. Some analysts say a stronger grip on the hands of the Biden administration may be needed. OPEC’s de facto leader could change his calculus if “conventional war breaks out on European soil and crude prices soar past $100 a barrel,” said Helima Croft, an analyst at RBC Capital Markets, an investment bank, writes.
The market is likely to heat up further in the coming weeks, analysts say, especially if the conflict over Ukraine comes into play. threatens to disrupt the flow of energy. Oil inventories are much lower than the long-term average, creating the risk of a price spike. Any disruption involving Russia, a major oil exporter, would send shivers through markets.
https://www.nytimes.com/2022/02/02/business/opec-meeting-oil.html With oil prices rising, OPEC and its allies meet to discuss production