The “OPEC” center in Vienna ahead of tomorrow’s meeting (Getty)
Satisfies The “OPEC +” alliance. That includes the Organization of Petroleum Producing Countries (OPEC), led by Saudi Arabia, and producing countries from outside, led by Russia, tomorrow, Wednesday, in Vienna, in a meeting to be held for the first time since 2020. , when he switched to virtual meetings due to the spread of the Corona virus.
Russian Vice Premier Alexander Novak is expected to attend the “OPEC +” meeting, according to “Bloomberg” sources, as the alliance prepares to show unity and the largest production cut since 2020, after canceling the Joint Technical Committee meeting that was scheduled for Tuesday. The attendance meeting raises speculation that the “OPEC +” decisions will include policy changes, with Novak managing the downward direction of production.
Sources in the organization said Petroleum exporting countries According to “Reuters”, the “OPEC +” alliance of oil producers is considering the possibility of cutting production by more than one million barrels per day and that voluntary cuts by member states could add to this, making it the reduction. largest from 2020.
This step threatens raise oil pricesAt a time when most of the world is struggling to cut energy costs and could create a potential break with the United States, President Joe Biden has been looking to lower fuel prices for motorists ahead of the upcoming crucial elections. medium term, according to the Financial Times.
Saudi Arabia and Russia are the second and third largest oil producers in the world, after the United States, but are more dependent on energy revenues for public spending than the world’s largest economy.
Demand growth forecasts
Amin Al-Nasser, CEO of the giant Saudi oil company (Aramco), said during an energy forum in London on Tuesday that the oil market is not focused on global excess production capacity to increase production of oil is very low.
“The market is focused on what will happen to demand in the event of a recession in different parts of the world, it is not focusing on supply fundamentals,” he added.
He added that excess capacity amounts to 1.5 percent of global demand, which is very low, noting that oil demand will grow through 2030 and beyond. He considered that “the oil market focuses on short-term and not long-term economies” and that “Europe’s problem is gas and liquefied natural gas due to a lack of spare capacity”. “We will keep our market in Asia despite European demand,” she added.
And “OPEC +”, which includes “OPEC” and its allies like Russia, has refused to increase production to reduce oil prices, despite pressure from large consumer countries, including the United States, to help the global economy. .
However, prices have fallen to less than $ 90 a barrel, after reaching $ 120 in the past few months, due to concerns about the global economy, and a rise in the value of the dollar after the Federal Reserve (the bank central US) raised interest rates.
“The meeting could be as important as the 2020 meeting,” a source said, referring to the meeting where OPEC + agreed on record supply cuts of around ten million barrels a day, or ten percent. of global supplies, at a time when the Covid-19 pandemic hit demand.
American anger and European fear
Any major cut in production now would anger the United States, which is pushing Saudi Arabia to keep pumping more to help further reduce oil prices and Russia’s oil revenues, as the West seeks to punish Moscow for the invasion of Ukraine.
Russia faces challenges in maintaining oil production due to Western sanctions on the energy and financial sectors following the invasion of Ukraine earlier this year.
The Kremlin said Russian President Vladimir Putin and Saudi Crown Prince Mohammed bin Salman spoke last month, praising the efforts made under “OPEC +”, and affirmed their determination to abide by existing agreements. .
The Kuwait news agency quoted Kuwaiti Oil Minister Muhammad Al-Faris, who will travel to Vienna to attend the OPEC meeting, saying that “the group is studying the current situation of the global oil market and will make the decision. appropriate to ensure the security of supplies “.
Oil prices rose in early Asian trade on Tuesday amid expectations OPEC + could accept a significant reduction in crude oil production, but concerns about the global economy limited gains.
Brent crude futures rose 43 cents, or 0.5 percent, to $ 89.29 a barrel by 0108 GMT, after gaining more than 4 percent in the previous session. US crude futures also rose 22 cents, or 0.3 percent, to $ 83.85 a barrel. It had increased more than five percent in the previous session, marking its largest daily gain since May.
“Despite everything that has happened with the war in Ukraine, OPEC + has never been stronger and will do whatever it takes to make sure prices are supported,” Edward Moya, senior analyst at OANDA, said in a statement.
Oil prices have fallen for four consecutive months as the closure of COVID-19 in China, the largest oil importer, held back demand, while higher interest rates and a stronger dollar put pressure on financial markets. global.
Major central banks have embarked on the largest round of interest rate hikes in decades, raising fears of a global economic slowdown.
On Tuesday, two senior European Commission officials called on the European Union and 27 nations to jointly borrow to finance a response to the energy price crisis that threatens to plunge the bloc into recession.
In an opinion piece in the Irish Times, European Economic Commissioner Paolo Gentiloni and Internal Market Commissioner Thierry Breton said the new loan could be modeled on joint debt issued during the COVID-19 pandemic to support jobs that otherwise they would be lost.
Their proposal comes as Germany’s massive € 200 billion ($ 197.4 billion) support package for households and businesses is raising concerns for other EU governments, unable to match this support, over the equity of competition in the single market.
“It is more important than ever to avoid the fragmentation of the internal market, the establishment of a race for subsidies and the questioning of the principles of solidarity and unity that underlie our European project”, write the commissioners, according to “AFP. ” “Faced with the formidable challenges that await us, there is only one possible answer: Europe’s response to solidarity”.
During the pandemic, the European Union jointly borrowed 100 billion euros at a very low cost, under its SURE scheme, and lent money to governments to support workers’ wages during the economic downturn.
