(London) New cut in production quotas or status quo? OPEC + meets on Sunday in a delicate context, marked by the fall in oil prices and the entry into force of new sanctions against Russia.
The representatives of the thirteen members of the Organization of the Petroleum Exporting Countries (OPEC), led by Riyadh, and their ten allies led by Moscow, partners of the OPEC + agreement, meet by videoconference to decide on their next production target.
They finally opted for a virtual meeting format, a day before the start of the European Union’s embargo on imports of Russian crude, which must come with a price cap.
The alliance should vote for a “renewal of the previous decision” relating to a drop of 2 million barrels per day, an Iranian source told AFP, the market being “very uncertain” with the imminent arrival of new set of sanctions against Russia.
China worries
This is also the prognosis of most analysts.
“It’s a safe bet that the group will reaffirm its commitment to its latest production cuts,” says Stephen Brennock of PVM Energy, although he does not rule out that OPEC + will go further to support oil prices. .
Because since the October meeting, which was held at the headquarters of the cartel in Vienna, prices have fallen heavily to their level of early 2022, far from the peaks reached after the start of the Russian invasion of Ukraine. .
The two global benchmarks for black gold are now trading between 80 and 85 dollars a barrel, against more than 130 dollars in March.
China, the world’s largest importer of crude oil, crystallizes concerns, with the current resurgence of the epidemic raising fears of generalized confinement weighing on the economy.
Beijing gave markets hope this week, however, by signaling a possible easing of the strict “zero COVID-19” policy, after a wave of angry protests over health restrictions.
Added to this situation are fears of a recession, against a backdrop of soaring inflation in Europe and across the Atlantic.
Russian “influence”
Beyond the economic gloom, the big unknown in the oil equation revolves around Russian crude, in the sights of Westerners anxious to reduce the financial resources allowing Moscow to finance the war in Ukraine.
The EU has decided to ban the Twenty-Seven from buying Russian oil by sea from December 5, “which threatens more than 2 million barrels a day”, according to analysts’ estimates. ANZ.
In addition, discussions on the price cap, supposed to reinforce the effectiveness of this embargo, ended on Friday.
The price of oil sold by Russia to Western countries will be capped at 60 dollars a barrel in the coming days, the countries of the European Union, then those of the G7 and Australia having found an agreement on Friday three days from the entry into force of the European embargo.
Urals, the benchmark variety for Russian crude, is currently trading around $65 a barrel, barely above the European ceiling, implying limited short-term impact.
“The G7 and Australia […] have reached consensus on a maximum price of US$60 per barrel for crude oil of Russian origin transported by sea,” the countries announced in a joint statement. Beyond this ceiling, tankers transporting Russian crude to third countries can no longer be financed or insured within six months by operators, in order to hinder a reorientation of exports from Moscow.
Russian President Vladimir Putin has warned of “serious consequences for the global energy market”.
The Kremlin “has several options to circumvent” this measure, underlines Edoardo Campanella, analyst of UniCredit. And he can count on the support of Saudi Arabia, which has never failed him since the beginning of the conflict – to the chagrin of the United States.
“Moscow could retaliate by using its influence within OPEC to push the alliance to take a more aggressive stance,” in a warning to the West that ruffles the cartel’s price-regulating agenda.
Such a scenario would “aggravate the global energy crisis”, warns the analyst.