Opec+ should not be surprised this time

opep

Pumping more, again and again: after agreeing in early June to open the valves further under Western pressure, the Opec+ oil-producing countries, which are meeting on Thursday, are expected to stop there.

“We don’t expect any surprises,” notes Jeffrey Halley at Oanda, referring to “a mere formality.”

Appointment become almost monthly since the pandemic of Covid-19 members of the Organization of Petroleum Exporting Countries (Opec), meet at 11:00 GMT by video conference in Vienna, headquarters of the alliance.

At their last meeting, they had decided to increase their July production by 648,000 barrels per day. They should keep the same pace, according to analysts.

Until then, and since the spring of 2021, the cartel had limited itself to modest increases in its quotas with the aim of gradually returning to its pre-Covid levels.

“Political Theater”

But the effort made was not enough, as the United States and the European Union (EU) are in need of oil. This is due to the establishment of an embargo
on Russian deliveries.

On Monday, France again called on producer countries to increase their volumes “in an exceptional manner”. This, in order to curb the surge in prices at the pump caused by the war in Ukraine.

The subject will also be on the agenda during the visit of US President Joe Biden to Saudi Arabia in mid-July.

Edward Moya, also of Oanda, has few illusions: “This is political theater, this trip will not result in a significant increase beyond what has already been decided,” he believes. And even if the alliance gave in to calls, “it would not have the capacity to do so,” the expert continued, recalling that many Opec+ countries “are subject to international sanctions or suffer from production problems.”

As a result, the set quotas are rarely reached.

Members on the key

Targeted by the United States and the EU since the invasion of Ukraine, Russia has joined the ranks of undesirable countries placed under sanctions.

As for Libya, another member of the alliance, it is in the grip of a long and serious political and institutional crisis. Oil production, the main source of revenue, is hostage to this crisis with many sites forcibly closed.

Other nations such as Nigeria, Congo or Equatorial Guinea are poor performers. Lack of investment in infrastructure
oil companies at the height of the pandemic, preventing them from achieving their objectives.

Even the top-ranked countries – the United Arab Emirates and Saudi Arabia – are reportedly struggling to boost their volumes, according to reports
this week by French President Emmanuel Macron.

“If true, this means that Opec+ oil production in July and August will not increase further despite the recent agreement,” worries Stephen Brennock of PVM Energy.

Given this impasse, analysts fear that only a recession will bring prices down.

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