The black gold producing countries of OPEC + left their production quotas unchanged on Sunday in a very uncertain climate, on the eve of the entry into force of new sanctions targeting 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, have agreed to keep the course decided in October of a reduction of two million barrels per day until at the end of 2023, two participants in the meeting told AFP.
A press release confirmed the continuation of the current strategy, taken to support prices.
“It’s not a big surprise”, commented analyst Hans van Cleef of ABN Amro, recalling that the alliance had already “warned of a slowdown in economic growth and therefore in demand for crude”. .
In recent weeks, the prices of the two world benchmarks have lost ground and are between 80 and 85 dollars, far from their peaks of more than 130 dollars reached in March after the start of the invasion of Ukraine.
Which, “retrospectively, validates our course of action”, argued OPEC +, which had aroused the ire of the White House by slashing its quotas.
The next meeting was set for June 4, 2023, but the group said it was ready to meet “at any time” between now and then to take “additional immediate measures” if necessary.
Russia in the spotlight
The decision was made after a quick meeting by videoconference, OPEC + returning to its habits taken during the Covid-19 pandemic after an exceptional meeting in early October in Vienna, headquarters of the cartel.
Speculation had run on a more drastic cut, but the group preferred to temporize in front of “the uncertainty as to the impact on the production of Russian crude” of the new set of sanctions, underlined Giovanni Staunovo, analyst of UBS questioned by the AFP.
Russia is against the cap on the price of its oil that the European Union, the G7 and Australia have planned to put in place on Monday “or very soon after” to deprive Russia of the means to finance its war in Ukraine.
The price of a barrel of crude from the Urals is currently fluctuating around 65 dollars, barely above the ceiling of 60 dollars.
But the Kremlin has warned that it will no longer deliver oil to countries that adopt this mechanism, a position reaffirmed on Sunday by Russian Deputy Prime Minister in charge of Energy, Alexander Novak.
Quoted by Russian news agencies, he even claimed that Russia was working “on mechanisms to prohibit the use of the capping tool, regardless of the level set”.
“Such interference can only cause further market destabilization and a shortage of energy resources,” he said.
Moscow will also be hit from Monday by an EU embargo on its oil transported by sea.
And China too
Another element that played into the status quo, according to the UBS expert, “a certain easing” of strict health restrictions in China, likely to alleviate market concerns.
Demand from this country, which is the largest importer of crude in the world, is scrutinized by investors, and the slightest sign of economic slowdown or renewed epidemic has a direct impact on prices.
In this gloomy context and in the face of fears of a global recession, Brent from the North Sea and its American equivalent, WTI, have fallen by around 8% since the organization’s last meeting in early October.
If OPEC + opted for caution on Sunday, the alliance could in the coming months “adopt a more aggressive position”, in a warning to the West which bristles the 23 countries by regulating prices, predicts Edoardo Campanella, UniCredit analyst.
For Hans van Cleef, it now remains to be seen how the markets will react to the resumption of trading on Monday. In any case, the maintenance of the OPEC + strategy combined with the sanctions against Moscow “are likely to raise prices”, he believes.