Oil-producing countries decided on Wednesday to lower their production targets. This decision, which risks causing energy prices to soar as winter approaches, marks a new stage in the rapprochement between Saudi Arabia and Russia, to the chagrin of the United States.
Back in Vienna for the first time since the start of the Covid, the thirteen members of the Organization of the Petroleum Exporting Countries (OPEC) led by Saudi Arabia and their ten partners led by Russia wanted to mark the occasion. After a brief meeting on Wednesday, they agreed on a reduction of 2 million barrels per day for the month of November.
This drop in production, the largest since the start of the pandemic, will likely increase prices, as consumers finally breathed a sigh of relief as prices at the pump began to decline.
The White House immediately reacted on Wednesday, denouncing a “cartel alignment” with Russia. This decision is a new blow for the United States, which sees Saudi Arabia, a traditional ally, getting closer and closer to Russia.
Energy as a weapon of war?
“Why is this organization acting once morest the United States and Europe? Why is OPEC trying to hold the whole world hostage?” asked a CNBC reporter following the meeting. “Show me where the act of belligerence is,” retorted Prince Abdulaziz bin Salman, Saudi energy minister.
Faced with the journalist’s reminders, OPEC Secretary General Haitham al-Ghais argued: “We are not endangering market security. We are bringing security and stability to the energy market”. At what price? “Everything has a price. Energy security also has a price”.
>> Excerpt from the exchange:
A way to defend their price
Despite numerous appeals from Westerners wishing to curb soaring prices, OPEC+ is united in refusing to open the floodgates of black gold widely.
According to Malik Zetchi, financial analyst at Pictet Wealth Management, the OPEC+ decision is above all aimed at strategic economic ends: “These higher prices will allow oil companies to invest with a certain visibility. It is a way of defending their price and not let the economic crisis take over oil prices”.
At 7:30 p.m. on RTS, he also deciphers geopolitical considerations, which must certainly have played out in the background: “The United States is releasing oil on the markets, which is not pleasing either. to OPEC”, specifies the specialist.
To Russia’s advantage
In any case, for the Kremlin, this cut comes at the right time. Moscow is facing the entry into force of the European embargo on Russian oil at the beginning of December, and the possible establishment of price cap mechanisms by the European Union and the G7.
By driving prices up, Russia might thus maximize its revenues from crude exports, particularly to India and China.
As for the economic outlook for Europe, they are not encouraging, fears Malik Zetchi: “It’s not good for inflation, which central banks will have to fight. So it’s not good for the markets, nor for the economy”.
Feriel Mestiri, Delphine Gianora
