OPEC reopens the supply tap after the European veto on Russian oil | Economy | The USA Print

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Small relief, but relief nonetheless. After months of total closure of the crude oil tap and growing requests from large consumers, the expanded version of the Organization of Petroleum Exporting Countries (OPEC) has given its arm to twist this Thursday: both in July and August it will raise almost 650,000 barrels per day the volume it puts on the market, a relevant increase compared to the timid increase of 430,000 barrels per day in May and June.

The rise represents an increase of just over 2% in the production of classic OPEC (without Russia) and around 1.5% of that of OPEC+, the enlarged OPEC, which includes —in addition to the 13 members of the cartel original (Iran, Iraq, Kuwait, Saudi Arabia, Venezuela, Libya, United Arab Emirates, Algeria, Nigeria, Gabon, Angola, Equatorial Guinea and Congo) – to Russia and several countries of the former Soviet orbit. After the initial refusal to exclude Moscow in the first weeks of the invasion of Ukraine, the partners are now discussing its expulsion from the expanded cartel.

The move, which comes just 72 hours after the European Union agreed to a partial veto on Russian crude, aims to fill a small part of the gap that Moscow will leave in both the community and global markets. For this, the participation of the countries of the Persian Gulf —led by Saudi Arabia and the United Arab Emirates, which still have some idle production capacity— seems essential. Two African nations, Algeria and Nigeria, could also do their bit.

The ambition, however, will have to be much greater in the coming months: calculations by the oil sector suggest that Western sanctions on Moscow will exclude between two and three million barrels a day from circulation, between 2% and 3% of what the world consumes. “These volumes will barely make a dent in the market deficit”, estimates Amrita Sen, from the thinktank Energy Aspects. His words are representative of the general feeling of analysts: OPEC’s change of tone is positive, but falls far short of what would be necessary to rebalance the forces of supply and demand. Late in the afternoon in Europe, in fact, the price of crude rose slightly after falling in the initial section of the day.

The latest statement from the G-7 —the group of the world’s greatest powers, which last week called on the producing bloc to increase its pumping as an emergency measure to curb escalating inflation— in the face of the persistent imbalance between supply and demand has had an effect . Although not in the amount that they would like, the decision is good news for Western interests —especially in Europe, a huge net importer— and for the three major Asian powers: China, Japan and India. All of them should see the price rope lighten in the coming months. the barrel of brent, the reference in the Old Continent, today costs almost 120 dollars, three times more than two years ago and the maximum in more than a decade. The current figure, however, is still far from the 150 dollars that it touched in 2008, in the midst of the super cycle of raw materials.

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The relaxation of OPEC’s position comes at a key moment: not only shortly after the EU released the final agreement to gradually stop importing Russian oil, but also in full preparation for the meeting between the president of the United States, Joe Biden —one of the leaders who has most insistently insisted on the need to reconsider his initial position—, and the Saudi crown prince, Mohamed bin Salmán, the undisputed leader of the oil cartel. A gesture of goodwill that Washington has been quick to celebrate with explicit recognition of the United Arab Emirates, Kuwait and Iraq, the countries that have contributed the most to the change in position. The president of the European Commission, Ursula von der Leyen, has also applauded the measure.

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