OPEC under strong pressure to do something in order to lower oil prices

Oil&Gas Materials 25 October 2021 11:38 (UTC +04:00)
OPEC under strong pressure to do something in order to lower oil prices

BAKU, Azerbaijan, Oct.25

By Leman Zeynalova – Trend:

OPEC is under strong pressure to do something in order to lower oil prices, 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.

“The price of North Sea Brent closed at $85.53 per barrel (December 2021 contracts) in London on 22 October and West Texas Intermediate at $83.76/b in New York. The Brent price was only $18/b in April 2020. At the very beginning of 2020, before the COVID-19 crisis, Brent was at about $68/b. Crude prices were higher than $100/b between 2011 and the end of the first half of 2014. Brent even reached an historical peak of $147/b in July 2008,” said the expert.

Perrin pointed out that US pressures in order to lower high oil prices is not a new story.

“At the end of March 2021 the US Energy Secretary, Jennifer Granholm, called the Saudi Energy Minister just before an OPEC+ Ministerial Meeting. On 1 April OPEC+ decided to add 2 million barrels per day of oil on world markets. During the summer President Biden's National Security Adviser, Jake Sullivan, publicly said that OPEC+ was not doing enough to support the world economic recovery. And, some days ago, President Biden himself said that gasoline prices were very high because of a ''foreign policy initiative''. ''That's because of the supply being withheld by OPEC'', Mr. Biden told a CNN Forum in Baltimore on 21 October. He did not refer to OPEC+ (23 countries, of which the 13 OPEC member states) even if decisions on oil output are adopted by OPEC+ countries and not only by OPEC,” noted Perrin.

The expert believes that the main problem for the US and for other importing countries is not only the increase in oil prices, it is a very strong rise in energy prices (oil, gas, coal and electricity).

“Energy prices are very sensitive, politically and economically speaking, because they are crucial for consumers (everyone needs energy) and for the economy. Political leaders are thus facing a lot of discontent due to the pressures on the consumers' purchasing power and on the costs and profitability of many companies. It is thus perfectly logical, at least in political terms, that OPEC and OPEC+ are under strong pressure to do something in order to stabilize or to lower oil prices. The next OPEC+ meeting will take place on 4 November. The goal of this meeting is to take a decision on the OPEC+ production level in December. In July OPEC+ countries decided to increase their output by 400,000 b/d each month from August 2021. Many consuming countries, including the US, would like OPEC+ to go beyond their July decision and to put more oil on the market. This includes many Western countries but also some emerging states which are importing and consuming more and more oil.”


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