OPEC, at a conference on Wednesday October 5, met for the first time since March 2020. During this meeting, the various representatives took the decision to reduce in a way drastically reduce oil production quotas. And this, to support fuel prices. However, this decision immediately attracted the wrath of the White House. But also, risk of impacting fuel prices on French territory. We tell you everything!
Fuel-related problems since the beginning of the year
Since the beginning of the year, France has experienced a price increase fuel. Indeed, for many months, the price of fuel increased every week. And this, until reaching unprecedented thresholds. It should be remembered that dn January 22 to 29, 2022, a liter of diesel sold, on average in France, at €1.6704 per litre. This already represented an increase of 1.6 cents compared to the previous week.
By way of comparison, Unleaded 95-E10 cost an average of €1.7202 per liter at the same time. An increase of 2.1 cents compared to the previous week. This price increase is mainly the result of the current conflict between our neighbors to the East.
Government fuel subsidies
However, the government was able to support the French. And this, with certain aids in place. As part of the law on purchasing power this summer. Indeed, the State has played its part by proposing the payment of inflation allowance of €100. And this, close to 38 million French beneficiaries.
« The inflation allowance, the energy cheque, what we have done with EDF, what we are doing to cap gas prices: the bill for all of these measures. It’s 15 billion euros already committed by the State to protect the French ”, declared Bruno the Mayor, on January 19, 2022. In addition, the government proposed the rebate 30 cents per litre. Indeed, this aid, from September 1 to October 31, should allow the French to pay less at the pump.
Joe Biden “disappointed with OPEC’s short-sighted decision”
Despite the efforts made by the French government in recent months, a decision this Wednesday, October 5 seems to have put a stick in the wheels. The thirteen members of OPEC and their ten partners, including Russia, recently announced a drop of ” two million » barrels of fuel per day. And this is planned for the month of November. Our colleagues from France Info then explained that this represented the most significant reduction since the start of the Covid-19 epidemic. It should be added that US President Joe Biden wished to emphasize that he was “ disappointed with OPEC’s short-sighted decision ».
It should be remembered that Westerners are trying to limit the impact of rising energy prices. And it has been for a few weeks now. Fuel prices are then likely to rise once more. And this, especially in France. Moreover, knowing that the State rebate goes from 30cts/litre to 10cts/litre from November 1. The thirteen members of OPEC, led by Saudi Arabia and their ten partners, then took the decision to cut fuel production by “ two million barrels per day “. And this, for the month of November according to a press release from the alliance.
Prices might go up…
« This is the largest reduction since the start of the pandemic added Srijan Katyal of brokerage firm ADSS. This decision may have a strong impact on the French. And this, ” as consumers breathed a sigh of relief “. Indeed, prices at the pump have barely fallen since this summer. This decision taints progress. And this, at a time when the French were regarding to begin to feel the benefits of aid.
Our colleagues from Actu.fr then explained: The two global crude benchmarks have lost ground in recent weeks, hovering around $90 a barrel, a far cry from the highs recorded in March at the start of the war in Ukraine (nearly $140). “. And this, before adding: Prices, which had initially reacted little, rose by more than 1% around 4:00 p.m. GMT, to 93.30 dollars a barrel of Brent from the North Sea, and 87.71 dollars for a barrel of WTI, its US equivalent ».
Uncertainties regarding the global economy
The impact of fuel prices on consumers was a hotly debated topic during this conference. Saudi Energy Minister Abdel Aziz bin Salman has faced many reviews. He then announced ” the various uncertainties ” with respect to the world economy. Moreover, according to him, it is necessary to show a lot of reason to avoid any disaster. He even insisted on the need to be proactive », and this for « stabilize the market ».
According to Capital Economics analyst Caroline Bain, this symbolic drop is not a real surprise following the murmurs of recent weeks “. Additionally, an analyst at Seb named Bjarne Schieldrop wanted to explain OPEC’s decision. According to him, OPEC wants « avoid a possible accumulation of stocks and therefore low oil prices “. Another analyst at Oanda thinks this decision remains purely financial. He says that l’alliance « clearly wants to keep prices high “. And this, since fuel prices provide lucrative revenue.
This beneficial decision for Moscow
It should be noted that this decision, above all, remains predominantly beneficial for Moscow. Indeed, Moscow will be able to fill its coffers. And this, while Europe also wanted to take a decision modifying imports of Russian fuel. The latter was to come into force at the beginning of December. Moreover, the Russian Deputy Prime Minister, in charge of Energy, refuted European sanctions policy. Indeed, on Wednesday during the conference, Alexandre Novak attacked this decision.
It should be emphasized, that the thank you October 5, the latter has castigated any capping of Russian oil prices. According to him, this measure, envisaged by the EU, ” violate market mechanisms and might have a very bad effect on the global industry. When European representatives spoke of the risk of fuel “shortages”, the latter therefore warned that Russian companies ” would not supply oil to the countries that use this instrument ».
Regulate fuel production
OPEC forms an alliance, created in 1960, aimed to regulate the production and price of crude oil. Then, in 2006, it expanded to Russia to form OPEC+. This alliance takes place in establishing quotas, so that all the representative countries agree. In the spring of 2020, the members of the alliance had made the decision on the cuts, of nearly 10 million. And this, in the face of the collapse in demand following the global pandemic of Covid-19. This historic gesture had worked well and therefore proved that this alliance had a key role in these decisions.
At this conference, the declaration, signed at the time of Covid-10, was indeed extended. OPEC has extended this agreement until the end of 2023 “. This decision then constitutes a sign of the cohesion » of the covenant. A cohesion praised by the Saudi prince despite the current situation between our eastern neighbors. It remains to be seen what impact this production reduction of fuel will actually be on French territory.
