Saudi Arabia takes risks by raising oil prices
Prince Abdelaziz ben Salmane has announced a voluntary reduction of around one million barrels per day, which will apply from July and may be extended. The announcement came at the end of a meeting in Vienna of the thirteen members of OPEC and their ten allies, led by Russia. Between them, the 23 participants (Opep+) account for 60% of the world’s black gold production. This additional cut will be added to the cuts already introduced by nine countries at the beginning of May and “extended until the end of 2024” for a total of 1.6 million barrels a day. A gesture welcomed by the Saudi Energy Minister. In front of the press, Abdelaziz ben Salmane said it would “bring stability” to the black gold market, where prices are at half-mast. A measure he went so far as to describe as a “Saudi treat”, the “icing on the cake”.
The market is very uncertain and black gold prices have plummeted in recent months, despite a previous announcement in early April of drastic cuts. This strategy, launched in the spring, failed to lift prices in a market depressed by fears of global economic recession, rate hikes by the main central banks and the laborious recovery of demand in China following the end of anti-Covid restrictions. And what about this time? Asked by AFP, analysts say they expect “a positive reaction from the market”, without however guaranteeing such results in the long term. Tamas Varga of PVM Energy warns that “a downturn in demand due to inflationary pressure could cancel out the effect of this reduction in supply”. The alliance has already warned that it will call an emergency meeting “if necessary”.