For months, the members of the cartel oil are seeking to bump up the price. Saudi Arabia has agreed to a reduction of 500,000 barrels per day.
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fourteen members of the Organization of petroleum exporting countries (OPEC), meeting Wednesday, November 30, in Vienna, finally reached an agreement to decrease their production of black gold. A measure that will take effect on 1st January, said the organization’s president, Mohammed Bin Saleh Al-Sada. These countries, which provide a third of world production, have been seeking for months to bump up the price, fell to 114 dollars (108 euros) per barrel in mid-2014 to less than $ 50 today.
in London, a barrel of brent of the North sea is immediately appreciated, going back over the top of the 50 dollars (+ 8 %) a few minutes after posting this then as yet unofficial. In New York, the Light Sweet Crude (WTI), the benchmark u.s. crude, gained 3,62 dollars (+ 8 %) and reached 48,85 dollars on the contract for delivery in January
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Gesture of goodwill
This is the first cut decided by OPEC since December 2008, when the financial crisis post-Lehman Brothers had resulted in a collapse of course, fallen from $ 147 to around $ 35 between August and December 2008.
The OPEC members were agreed at the end of September, to Algiers, to bring the daily production of up to 32.5 million barrels. The sources cited by news agencies indicate that the figure chosen in Vienna is in accordance with the agreement of principle signed in the algerian capital. This should lead to a reduction of 1.2 million barrels per day.
Who is participating ? Saudi Arabia, the leader of the cartel, has said that he is ready to bring its production from 10.5 to 10 million barrels per day. In a gesture of good will, she has accepted that Iran, with which it is in conflict in Yemen and Syria, pump up 3.8 million barrels, roughly the level that the islamic Republic had reached before the embargo, western decreed in 2012 to impose sanctions on its nuclear program.
Read also : crude Oil : OPEC is trying to regain the hand
Libya, and Nigeria-exempt
Iraq is the second largest producer of OPEC, will have to make an effort as pétromonarchies of the arabo-Persian gulf, Algeria, Angola or Venezuela, which, however, is in full economic chaos. On the other hand, Libya has been shaken by a civil war and Nigeria in order to attacks on its oil installations in the Niger delta have been exempted from the effort.
The OPEC will also apply to countries that are not members of the organization to bear part of the burden, estimated at around 600 000 barrels per day. Including Russia, the leading world producer with more than 11 million barrels. It is said to be ready, according to the OPEC, to cut off 300,000 barrels a production of more than 11 million barrels, a record since the fall of the USSR in 1991.
After a first failure in Doha (Qatar) in mid-April, the members of the cartel oil could not separate them on a new failure. It probably would have precipitated the fall in commodity prices in the next few weeks – some analysts conjured up to 30 dollars – and showed that OPEC had definitely lost the hand on the markets.
It is not known when supply and demand come together to restore balance to the markets, roughed up for five years by the massive influx of oil shale (shale oil) in the united states. The consumption should be relatively high in 2017 with an increase of about 1.5 million barrels per day.
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Low flexibility
The producing countries no longer have much leeway to pump more crude and the market could rebalance. It is the analysis of the saudi minister of energy, Khaled Al-Faleh, which ensures that the market would have rebalanced itself in 2017, even without agreement in Vienna.
The analysts of the large banks involved in the trade of crude don’t panic either. In a note published on the eve of the summit of OPEC, Morgan Stanley believed that the price oscilleront between $ 40 and $ 55 for a good part of 2017. Goldman Sachs expects an average price of $ 45 until the summer.
It is necessary to have the detail of the agreement to be certain that it will have a lasting effect on prices. Nothing is less sure. Some members of OPEC may be tempted to work around discreetly the agreement. And beyond statements of principle, Russia has never really fulfilled its commitments.
Read also : the OPEC agreement, a surprise… but fragile
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