2023-10-10 18:30:13
Another element could influence the price surge. Last July, OPEC, the Organization of the Petroleum Exporting Countries, decided to cut production in an attempt to raise crude prices in the face of the global economic slowdown. Saudi Arabia, the leader of the group, has alone reduced its production by more than a million barrels per day. But the conjunction of the two events a priori does not worry too much. Because nowadays, oil that is too expensive can turn out to be counterproductive.
“Today, the problem is that expensive oil with an expensive dollar leads to a destruction of demand. That’s why we thought that even if there was a spike, if the price of oil ever rose to $100 a barrel or even above, oil prices wouldn’t stay at that level for very long. this level“, relativizes Xavier Temmermans.
Therefore, the specter of an oil shock, like that of 1973 during the Yom Kippur War, seems unlikely, even if we must remain cautious. According to the expert, the situation is “completely different” : “In 1973, you had a whole series of Arab countries attacking Israel at the same time. Here, that is not the case at all. Egypt, Saudi Arabia, Syria are not involved in the conflict. The second big difference was the fact that, at the time, OPEC controlled a much larger share of global oil production. This is no longer the case today.”
In conclusion, the impact of the situation in the Middle East on oil prices should not be underestimated. But we should expect a period of greater volatility.
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