Oil: OPEC+ under pressure but no change in sight

Posted 31 March, 2022

The thirteen members of the Organization of the Petroleum Exporting Countries (OPEC) are likely to again increase the total level of production by 400,000 barrels per day for the month of May, according to analysts.

The OPEC+ oil-producing countries, which meet on Thursday, are still expected to maintain their strategy of very timidly opening their black gold valves, despite Western pressure to end price volatility in the midst of the war in Ukraine.

The thirteen members of the Organization of the Petroleum Exporting Countries (OPEC), led by Riyadh, and their ten allies led by Moscow will probably once again increase the total level of production by 400,000 barrels per day for the month of May. , according to analysts.

“OPEC+ has surprised the markets several times during its monthly meetings, but the basic scenario, for now, is that the status quo will be maintained,” predicts Stephen Innes, an analyst at SPI Asset Management.

“The signals do not suggest any deviation” from the policy started in the spring of 2021, he continues.

The alliance's debates will begin with technical discussions within the Joint Ministerial Monitoring Committee (JMMC) at 1:00 p.m. in Vienna, the headquarters of the cartel, before the plenary meeting by videoconference.

Expectations are however immense, oil having touched on March 7 its historic price records reached during the financial crisis of 2008. Brent of the North Sea, a reference to the black gold in Europe, peaked at 139.13 dollars per barrel and US WTI hit $130.50.

Since then, prices have fallen from their peaks, making it "even less likely that OPEC + decides to increase its production more widely", comments Carsten Fritsch, an analyst for Commerzbank.

The White House is expected to announce a plan on Thursday to draw up to a million barrels a day from US strategic reserves, according to information from the Bloomberg agency citing sources familiar with the matter.

The price of a barrel of American oil WTI fell in the wake by more than 5% at the opening of the Asian markets.


For OPEC+, which was created in 2016 with a view to regulating the market, the recent surge "is mainly due to geopolitical risks, and not to a real shortage of supply", recalls-the.

The war raised fears of disruptions in Russian oil supplies and caused extreme volatility, with prices soaring on news of Western sanctions against Moscow, or falling on hopes of progress in peace negotiations.

Calls from the international community have however multiplied, especially after the decision of the United States and Great Britain to stop importing oil from Russia, the second-largest exporter of crude oil in the world behind Saudi Arabia.

German Economy Minister Robert Habeck launched an “urgent appeal to exporting countries the next day to increase the level of production to relieve the market”.

The International Energy Agency (IEA), which had previously described the cartel's wait-and-see decisions as "disappointing", also urged OPEC+ to be "on the safe side".

"I really hope that the meeting will result in positive messages that could help reduce the pressure on the oil markets," said IEA executive director Fatih Birol in mid-March.

Same message from the side of the G7 countries, while British Prime Minister Boris Johnson went to Riyadh to try to convince the leaders of Saudi Arabia and the United Arab Emirates.




But nothing has been done: the Gulf countries are currently resisting Western demands.

The OPEC+ alliance, far from being destabilized by the conflict, appears more solid than ever. It is "here to stay," said Emirati Energy Minister Suhail al-Mazrouei on Monday, determined not to let "politics" undermine the organization.

"Unless someone is ready to supply 10 million barrels a day, we cannot replace the Russians" in the market, he added.

Saudi Energy Minister Abdulaziz bin Salman reiterated his commitment to OPEC+ on Tuesday, arguing that if the agreement "did not exist, we could not have stability in the energy market" and "the price volatility would be even worse”.

If he defended the apolitical “culture” of OPEC+, according to many experts, Saudi intervention in the markets would be perceived as a betrayal of Russia, preventing it from using its hydrocarbon exports to exert pressure on Westerners.

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