In an energy market disrupted by the war in Ukraine, the OPEC reaffirmed and extended in 2022 its alliance with Russia to defend the prices of Petroleumturning his back on the United States, although always with his eyes on China.
Led by Saudi Arabia, the Organization of Food Exporting Countries Petroleum (OPEC) will enter 2023 with its crude oil supply greatly reduced, thanks to an agreement that will be valid throughout the year.
The cut of 2 million barrels per day (mbd) announced in October sparked the anger of consumers, since it means the withdrawal of a volume equivalent to 2% of world consumption of “black gold” in the midst of the current economic and energy crisis.
Along with that controversial decision, the OPEC It also promised to extend for one year, until the end of 2023, its cooperation with Russia and nine other crude oil producers.
SNUB WASHINGTON?
The alliance pump cut OPEC+ fell badly especially in Washington, since President Joe Biden traveled to Saudi Arabia in July just to ask for the opposite: increase the offer to lower gasoline prices and thus curb galloping inflation.
The reduction came into effect one month before the European Union (EU) began applying its embargo on Petroleum Russian that forces you to feverishly search for alternative sources.
The White House reacted with open anger, calling the decision “wrong” and accusing Riyadh of siding with Moscow, going so far as to say it will rethink its relations with the Wahhabi kingdom, until now a US ally in the Middle East.
Although the OPEC He rejects having acted for geopolitical reasons, unrelated to the market situation. For many analysts, the decision reflects that geopolitics is changing the structure of the international oil sector.
THE DEFENSE OF PRICES
“The OPEC remains committed to defending the prices of the Petroleum“, explained to EFE Rafael Ramírez, former Venezuelan Minister of Petroleum and former president of the state PDVSA.
Remember that even wars between the partners, such as the one in Iran and Iraq, failed to break the oil group.
“The great secret of OPEC is that it has remained cohesive in defending the price of Petroleumeven if (his partners) kill each other,” he stresses from Rome.
Now, “the Biden administration or the European countries put pressure on the OPEC so that it leaves Russia aside, or so that the price of Petroleumbut the OPEC tells them no,” he points out.
“(But) the signal it sends is: we have nothing to do with that war (in Ukraine), those are not our geopolitical interests, rather we are going to get a high price from the Petroleum and we are going to defend it,” says Ramírez.
To this is added that China is “a great market” and Russia “an important partner” in the cooperation sealed in 2016 to deal with the growing rival supply of the Petroleum of US shale.
LIMITED PRODUCTION
Prior to the sharp cut in production, the OPEC+ had applied a plan to slowly recover its pre-pandemic pumping, an objective that was not achieved due to a lack of technical capacity from most of the partners.
Real production was well below the official quota when it increased to 43.85 mbd in September, from 40.49 mbd in January (not counting extractions from Venezuela, Iran and Libya).
EXTREME VOLATILITY
Prices skyrocketed after the start of the Russian aggression against Ukraine, to exceed $130 a barrel of Brent, its highest value in 14 years, at the beginning of March.
However, amid extreme volatility, prices have eased, under downward pressure from the slowdown in the world economy and energy consumption, especially in China.
Brent, for example, fell on Wednesday to 78.15 dollars/barrel, its lowest level since January.
The extreme volatility of prices reflects the turbulence and uncertainties that mark the market after a year full of unprecedented measures to overcome the energy crisis.
These include a large release of crude oil from the strategic reserves of the United States, the cap on the price of Petroleum Russian imposed this month by the EU and the G7, or the partial relaxation of the sanctions on crude oil production in Venezuela.
Instead, an attempt to revive the Iran nuclear deal to lift the oil embargo against that country was thwarted.
And as relations with Washington cool, Riyadh is poised to strengthen ties with China, a key market for its oil sales and where it competes with Russia, as Moscow redirects supplies that stop flowing to Europe to Asia.
