Western diplomatic efforts to persuade oil-producing countries to increase their supplies have met with little success. OPEC+, the body that brings together the main exporting nations and their allies, decided on Wednesday to increase supply by no more than 100,000 barrels per day from September, one of the lowest increases in its history. The number is well below the 430,000 in May and June and the 650,000 in July and August. After learning of the measure, both the price of a barrel of Brent – a benchmark in Europe – and that of West Texas in the United States stopped their decline and rose back above 1%, even if they then renewed with losses.
In a statement issued after the meeting, which was held by videoconference, producing countries justified the modest expansion of supply with a variety of arguments. They say excess capacity is currently established and should therefore be in fashion “with great caution” to replicate severe supply disruptions. And they warned that this shortage is a consequence of the “chronic” neglect of investments in the oil sector. They also pointed out that OECD oil inventories stood at 2,712 million barrels in June, 163 million less than the year in question and 236 million less than the 2015-2019 average. And that emergency reserves are at their lowest level in more than three decades.
The result is bad news in the fight against inflation, the main theme of the economic memorandum in Europe and the United States. Prior to the meeting, there was speculation of increases of between 300,000 and 400,000 barrels, which fell short of expectations. If the producing countries had agreed to deploy the tap more, the price of oil would probably have fallen more sharply, continuing the downward trend of recent weeks, which has even lowered fuel charges for drivers. A barrel of Brent today costs 99 dollars, very far from the 120 dollars of about two months ago, shortly after the announcement of the European veto on Russian oil.
The importance that Oeste attaches to any producer cartel movement has been recognized more intensely than usual recently. Last week, French President Emmanuel Macron received Saudi Crown Prince Mohammed Bin Salman at the Elysee Palace. And in mid-July, US President Joe Biden visited Saudi Arabia, where, in addition to agreeing to betray more than $5 billion worth of US missiles, he even tried to convince its leaders of the deprivation to increase production. help mitigate the enrollment inflation that the Republican Exam has been using for months to undermine its leadership. Biden had expressed optimism about announcing increased production “in the coming weeks,” citing Wednesday’s meeting.
Growth of 100,000 barrels, or about 0.1%, in global demand is below expectations, but that doesn’t mean oil prices are back to highs now: fears of a full-scale recession are raising expectations. interest rate. Pandemic lockdowns and the latest industrial orders data suggest that at least one global slowdown is underway, driving down the price per barrel as the capital cools, as does demand for oil.