OPEC and Russia reduce oil supply by 100,000 barrels – RTVE

The OPEC+ alliance, led by Saudi Arabia and Russia, has agreed this Monday to reduce the official oil supply of this group of 23 countries by 100,000 barrels per day as of October 1, fearing that a slowdown in the world economy will undermine the demand for “black gold”. With this decision, sanctioned by the ministers of the OPEC+ sector in their monthly teleconference, the increase in pumping for September that had been adopted at the previous meeting, on August 3, has been annulled. The ministers agreed on this day “to return to the production level of August 2022”, recalling that “the upward adjustment of 0.1 million barrels per day (mbd) was planned only for the month of September”, reports the Organization of Exporting Countries in a statement. In October, OPEC members participating in the agreement will collectively produce 26.689 million barrels of oil per day, while non-OPEC allies will pump 17.165 million. Saudi Arabia and Russia will both extract 11.004 million barrels per day. Possibility of convening a new meeting “at any time” In addition, in their final declaration they ask that the possibility of convening a new ministerial meeting of OPEC + be considered “at any time to address the evolution of the market, if necessary”, which could take place before the next regular and monthly meeting, convened for October 5. They have also highlighted that the decision has been made after reviewing “the current fundamentals of the oil market” and verifying “consensus on its perspectives”, without specifying which would be. However, the proposal of the possibility of a new meeting at any time, instead of convening the next regular meeting, as they have usually done until now, reveals a certain insecurity and uncertainty regarding the evolution of the oil market in the short term. Along these lines, the energy ministers of the 20 countries that are part of the production control agreement have indicated that they are aware of the adverse impact of volatility and the drop in liquidity, as well as the need to support market stability. Russia believes that limiting the price of its oil creates uncertainty in the marketRussia’s deputy prime minister, Alexander Novak, stated on Monday that the G7 agreement reached last Friday to seek a broad coalition to put a cap on Russian oil creates uncertainties in the world market. “There are many uncertainties, including those associated with production in countries that are not part of the (OPEC+) agreement, statements by individual G7 leaders, and issues being considered about the imposition of a maximum price for the purchase of Russian oil,” Novak said. “For this reason, we agreed to continue meeting monthly to provide the most rational solutions to the market,” he concluded. Novak has indicated that Monday’s decision is due to a slowdown in economic growth and stressed that the countries participating in the OPEC+ agreement they do not form any price of oil with their decisions, but rather balance the market.”We have a flexible tool. And we have a rational approach on how to balance the market. And here, the main thing, is that we are not talking about the formation of some kind of price, but of the sufficiency of supply for the market. So that, on the one hand, there is no surplus, on the other hand, there is no shortage”, he explained. Along these lines, he added that the demand for crude oil is still is recovering relative to pre-pandemic levels and they expect production to be above 100 million barrels per day in early 2023. “We are working, we continue to interact to reach this level without problems,” he added. Difficult energy situation for EuropeThe withdrawal of the increase in supplies promised a month ago, after a historic trip by the president of the United States, Joe Biden, to Saudi Arabia to ask OPEC to open the taps in order to make crude cheaper and reduce the inflation, comes at a time of high tension in the energy markets. The situation in Europe is more difficult after Moscow decided this Friday to suspend indefinitely the supply of gas through the Nord Stream 1 and threatened to cut off all oil sales and derivative products to the European Union if the G7 powers impose a ceiling on the price of Russian crude oil. The price of a barrel of Brent, a reference for Europe, has accumulated a downward path since June, when it exceeded 120 dollars per barrel. The price of a barrel settled this Monday in the London futures market at 95.74 dollars, 3.01% more than at the end of the previous session.