Opec + confirms its cautious policy at the end of an expeditious summit – archyde

The members of the Organization of the Petroleum Exporting Countries (OPEC) and their allies validated Wednesday, during a ministerial summit carried out with beating pace, their strategy of gradually increasing production, in the face of a recovery tinged with uncertainties.

Far from the psychodrama of July, it will have taken them less than an hour this time to reach an agreement.

Opec + “once again confirms (…) the upward adjustment of overall monthly production of 400,000 barrels per day for the month of October,” the group said in a statement.

This announcement, “unsurprisingly” for many market observers, is a continuation for the alliance which had decided in mid-July for a monthly increase of this order “until the gradual elimination” of the volume left under. land for the moment, in the fall of 2022 at this rate.

The decision, which relates to the month of October alone, also reflects the prudence of the alliance, which reserves the possibility of rectifying the situation if necessary next month.

Before the emergence of the Covid-19 pandemic, producers only met twice a year.

– Almost united front –

The market was waiting to know if Opec +, whose history is peppered with turf wars, would present a united front after the feud at the start of the summer when the United Arab Emirates publicly cried “injustice”.

Abu Dhabi, which campaigned for an increase in the basis for calculating its crude production quota, had finally won its case: its share, like that of several other countries (Iraq, Kuwait, Saudi Arabia and Russia), was then adjusted upwards, a revision that will take effect in May 2022.

If the short duration of Wednesday’s meeting testifies to a consensus quickly obtained, Russian Deputy Prime Minister Alexander Novak, in charge of Energy, will have played the role of maverick a little earlier in the day, sparing the suspense over its outcome.

Mr. Novak, quoted by the Interfax agency, indeed indicated that Russia was able to increase its production beyond its quota, causing a halt to the timid rise in crude prices initiated since start of the day.

– End of inadmissibility –

“Before the meeting, the group seemed to be facing a number of conflicting pressures,” responded Caroline Bain, of Capital Economics.

OPEC + is attentive to the resurgence in the number of Covid-19 contaminations, a serious threat to the demand for crude, even if it was intended to be reassuring.

“While the effects of the pandemic continue to cause some uncertainty, market fundamentals have strengthened,” he said.

The group is also facing pressure from the administration of Joe Biden, campaigning for a greater increase in production in order to limit the rise in prices at the pump and thus relieve the wallet of the American motorist.

In early August, US National Security Advisor Jake Sullivan explained that the cartel was “not doing enough” to boost oil production, threatening economic recovery.

But by this expeditious agreement, the twenty-three opposed the White House to an end of inadmissibility.

As an additional incentive not to reopen the floodgates too early or too quickly, the two benchmark crude prices experienced their worst month since October 2020 in August.

Brent and WTI calmly greeted the Opec + decision: they recovered shortly after 5:00 p.m. GMT to their closing level the day before after having faltered slightly earlier in the day.

bp / anb / eb