VIENNA — The
OPEC+ oil cartel agreed to a
tiny increase in production Wednesday, an amount analysts say will disappoint
US President Joe Biden after he personally lobbied Saudi leaders for help to
tame soaring energy prices.
اضافة اعلان
The cartel led by
Saudi Arabia and Russia decided to
raise production by 100,000 barrels per day for September, much lower than
previous increases, according to a statement issued after a ministerial
videoconference.
Oil prices seesawed following the announcement,
rising before falling more than two percent in afternoon trading, with the main
international contract, Brent, slipping under $100 per barrel. Traders were
also reacting to data showing US crude inventories had unexpectedly risen last
week.
“The smallest increase in OPEC+ history will do
little to help the ongoing global energy crisis,” Edward Moya, analyst at OANDA
trading platform, told AFP.
“The Biden administration will not be happy and this
will be a setback in improving US-Saudi relations,” said Moya, who expects oil
prices to remain stuck around $100.
With energy prices soaring following Russia’s war in
Ukraine, Biden made a controversial trip to Saudi Arabia in July in part to
convince the kingdom to loosen the production taps to stabilize the market and
curb rampant inflation.
The US president met Crown Prince
Mohammed bin Salman despite his promise to make the kingdom a “pariah” in the wake of the
2018 killing of journalist Jamal Khashoggi.
Biden said after his meetings with Saudi officials
that he was “doing all I can” to increase the oil supply.
“A 100,000 barrel per day output hike is a
pittance,” said Han Tan, chief market analyst at Exinity.
“It’s likely that the Biden administration will feel
let down, considering its overtures to Saudi Arabia have yielded scant results,
at least this time around,” Tan said.
‘Token gesture’
Saudi Arabia faced a
balancing act between its old ally, Washington, and its OPEC+ partner
Moscow,
which has been hit by Western sanctions over the Ukraine invasion.
“The increase was a token gesture to appease US
President Joe Biden,” said Stephen Brennock, analyst at PVM Energy.
The OPEC+ statement emphasized the “value and
importance of maintaining consensus as essential to the cohesion” of the group,
which includes the 13-member Organization of the Petroleum Exporting Countries
and 10 allies including Russia.
Russia’s deputy prime minister in charge of energy,
Alexander Novak, said OPEC+ made a “cautious” decision due to “uncertainties in
the market”.
He noted that COVID cases are rising.
“We see uncertainties associated with the disruption
of transport and logistics chains due to restrictions being introduced,
including for Russian oil and oil products,” Novak said.
Peter McNally, analyst at research firm Third
Bridge, said OPEC+ was expected “to take more of a wait-and-see approach to
adding material amounts of supply in the months ahead for several reasons”.
“The basis for the restraint are uncertainty around
the future of Russian production and the cloudier outlook in demand,” he said,
pointing to China’s COVID lockdowns and high fuel prices in the US affecting
demand.
Western lobbying
Biden is not the only
Western leader to have lobbied bin Salman.
French President
Emmanuel Macron hosted him last
week in Paris, with Macron’s office saying the two leaders agreed to work “to
ease the effects” of the Ukraine war.
Before announcing he would resign as British prime
minister, Boris Johnson had also visited bin Salman in Riyadh in March to plead
for higher oil production.
After cutting production in 2020 in response to
falling prices during the COVID pandemic, OPEC+ agreed to raise its quotas last
year as demand rebounded.
OPEC+ began to add around 400,000 barrels per day
(bpd) to the market last year, renewing the policy every month until June. It
upped production by almost 650,000bpd in July and August.
Its output is supposed to have returned to pre-COVID
levels after cuts totaling 9.7 million bpd — but only on paper, as some members
of the 23-nation group have struggled to meet their quotas.
Read more Region and World
Jordan News
.jpg)
.jpg)
