The OPEC+ oil alliance, led by >Saudi Arabia and Russia, hardly responded today to Western pressure to open its taps more by announcing a symbolic increase in pumping of only 0.22%, 100,000 barrels per day, and argued that it already has ” very limited” its ability to extract more oil in the short term.
The decision was adopted in the first monthly teleconference that the ministers of the sector of the 23 countries of the group celebrate after the trip in mid-July of the president of the United States, Joe Biden, to Saudi Arabia.
Biden made that visit to the world’s largest crude exporter in the hope of achieving a substantial increase in oil supplies that would help lower prices, triggered by the war in Ukraine and Western sanctions on Russia.
France, the European Union (EU) and the International Energy Agency (IEA) have also asked OPEC to put more crude oil on international markets.
HISTORICAL LOW
There was speculation in the markets that Riyadh could promote within the Organization of Petroleum Exporting Countries (OPEC), which it leads, a moderate increase in the supply of “black gold”, similar to those adopted each month since August 2021 , between 400,000 and 600,000 barrels per day (bd).
In this direction, the Kazakh Energy Minister, Bolat Akchulákov, spoke shortly before participating in the teleconference, advocating opening the taps to avoid overheating of the market.
“Today, as you know, the price (of a barrel of crude oil) is not 20 or 30 dollars, but around 100 dollars. It is a very good price. Now, on the contrary, it is about perhaps increasing the extraction so as not to overheat demand this time,” he said.
He considered that in the current situation “a range of between 60 and 80 dollars per barrel is acceptable for oil producers” and viable for the world economy.
But after having recovered this month the pre-pandemic level of extractions only on paper, without achieving it in reality due to the limitations of the productive capacity of many of the partners, the alliance today chose to add only 100,000 bpd in September.
This is the smallest increase in supply in OPEC’s 62-year history and is therefore merely symbolic, according to analysts, who do not expect the decision to have any effect on the evolution of “petroprices”.
The total share of pumping of the 20 countries that participate in the commitment to limit it (all except Venezuela, Iran and Libya) rises just 0.22%, to 43.955 million bd.
CAPACITY LIMITS
“The very limited availability” of the capacity to pump more crude in a short period of time “demands that it be used with great caution”, the ministers stressed in their final declaration, referring to the so-called “idle capacity”, key to responding to unforeseen supply cuts, and justify your decision.
Experts estimate that currently only Saudi Arabia and the United Arab Emirates still have significant spare capacity.
The rest is already pumping to the maximum of its technical possibilities, a situation that the OPEC + ministers blamed today on “a chronic lack of investment in the sector”.
“Special concern” causes them “that insufficient investment” will cause problems in meeting the demand for “black gold” beyond 2023.
They also recognized that the stored stocks of this raw material are clearly lower than those in the five-year period prior to the pandemic, and that the strategic reserves “have reached their lowest levels in more than 30 years.”
ALLIANCE WITH RUSSIA
Once again, the ministers made it clear that they have no intention of dispensing with their alliance with Russia by stressing “the importance” of maintaining the group’s internal “cohesion”, and called their next teleconference for September 5.
The ministers paid tribute to the Nigerian Mohamed Barkindo, who died on July 5 a few weeks after completing his term as Secretary General of OPEC, and congratulated his successor in office, the Kuwaiti Haitham Al Ghais.