BAKU, Azerbaijan, Sept.1
By Leman Zeynalova – Trend:
OPEC+ shouldn’t stop increasing its oil output, Francis Perrin, Senior Fellow at the Policy Center for the New South (PCNS, Rabat) and at the French Institute for International and Strategic Affairs (IRIS, Paris), told Trend.
“OPEC+ (23 oil-producing and exporting countries, of which the 13 OPEC member states) should stick to the decisions it adopted in its latest ministerial meeting on 18 July. It should thus go on increasing its crude production by 400,000 barrels per day each month for the time being. This decision will be reviewed each month, which is very wise in a fast-changing and very uncertain world, but it is too early to change the direction of the OPEC+ ship.
Of course, there are issues linked to the Delta variant and its impact on the world economy. This situation must be closely followed by oil-producing countries. But, so far, world economic growth remains very strong; oil prices are at comfortable levels ($73/b for North Sea Brent yesterday at the end of the day for October contracts and $68.50/b for West Texas Intermediate - WTI -, also for October contracts); oil production in the U.S. Gulf of Mexico fell dramatically due to the hurricane/tropical storm Ida; and we will need some time to assess the impacts of Ida on oil production and refineries in the U.S.,” said Perrin.
He recalled that during the summer, Jack Sullivan, national security advisor of President Biden, said that OPEC+ was not doing enough at a critical moment for the world's economic recovery.
“OPEC+ must do more, according to the Biden Administration. Taking into account this pressure and just after Ida, it would not be wise for OPEC+ to stop increasing its oil output in this context. It does not mean that OPEC+ must produce more than expected immediately due to the White House demands but, economically and politically speaking, the 18 July agreement must be confirmed for now.
A last argument is that the decisions adopted on 18 July were not easy to reach within OPEC+. The previous ministerial meeting at the beginning of July ended without any results due to internal disagreements, especially the opposition of the United Arab Emirates. It would be risky for OPEC+ not to apply this agreement as soon as 1 September. It is much too early to review this delicate balance.”
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