Appointment for the member countries ofOpec + who will meet tomorrow by videoconference to fine-tune the November production strategy. On Friday, the two benchmarks closed a week of highs during which they returned to the record levels of three years ago with Brent above 80 dollars a barrel (80.75 dollars). Analysts are divided on the next moves of the producing countries.
According to some, OPEC + will confirm the existing agreement, also in November, which provides for an offer of 400,000 barrels per day. This increase was decided last July, in correspondence with the reopening and the economic recovery, to gradually eliminate the 5.8 million barrels of cuts. The general secretary of OPEC Mohammad Barkindo he recently explained that the gradual increases in the group’s production stand responding to the increase in demand for crude oil, preventing the accumulation of excess stocks. “The decision to return 400,000 barrels a day to the market every month allows us to balance the need to meet demand while avoiding oversupply,” he said.
The group is slowly undoing record production cuts made in 2020 when prices plummeted due to the outbreak of the pandemic. However, in the last few hours the idea that Opec + can take shape decide on a further production increase. On Friday, Brent closed close to 80 dollars at 79.28 dollars (fourth week of increase) while WTI closed at 75.88 dollars (sixth week). Since the beginning of the year, Brent has risen by 53%, WTI by 56%.
To put pressure on the cartel, United States and India who would like more crude oil and lower prices (and inflation). “If OPEC + sticks to the expected increase of 400,000 barrels per day in November, energy markets will soon see oil prices at $ 90 a barrel“explained an analyst.
In conclusion, any increase of less than 600,000 barrels per day should lead to a price increase with severe effects on gas prices and inflation. The rises in crude oil are also closely linked to the rebound in natural gas prices globally due to the fact that the industry converges on other sources such as oil and coal. In Pakistan, Bangladesh and the Middle East, power plants have already started to change fuel.
However, as mentioned, in the last few hours the hypothesis of a more incisive intervention by the producers is taking shape. OPEC + would be considering moving beyond its existing agreement. The hypotheses examined by the producing countries range from an increase of a further 200,000 barrels (with the total that would thus go to 600,000 barrels per day) up to a doubling in the order of 800,000 barrels. “The price of oil is worrying,” White House press secretary Jen Psaki said on Thursday.
High oil prices were high on National Security Advisor Jake Sullivan’s agenda when he met with Saudi Crown Prince Mohammed bin Salman this week. Previously, the US government said it was in contact with OPEC and jointly assessed the oil price. Meanwhile, India, the world’s third largest oil importer and consumer, said higher crude oil prices would accelerate the transition to alternative energy resources.