The burning oil market was waiting for a gesture, but deaf to the calls, the member countries of OPEC + chose Monday to renew their strategy of modest increase in production, refusing to open the floodgates further to cap already high prices.

The thirteen members of the Organization of the Petroleum Exporting Countries (OPEC) and their ten allies via the OPEC + agreement, led respectively by Saudi Arabia and Russia, have “confirmed the upward adjustment of global monthly production of 400,000 barrels per day for the month of November, “the cartel announced in a statement issued after a flash ministerial summit held by videoconference.

If this decision is the logical continuation of the alliance policy decided in July, it nonetheless took the market by surprise as it goes against expectations.

Many players and observers were indeed counting on an acceleration in the production rate in response to the sharp rise in prices over the past six weeks, by more than 20% for Brent, the benchmark for European crude, and WTI, its counterpart. American.

Monday’s status quo will only fuel this surge even more, of the order of 3% in a few minutes from the end of the meeting. Reaching $ 78.38 and $ 82.00 respectively, WTI and Brent returned to higher peaks since November 2014 and October 2018 respectively.

– Serious risk –

Before the summit, the secretary general of the OPEC Mohammed Barkindo had given a clue by judging the relevant current strategy to “respond to the gradual increase in demand” without paying into an “overload of the supply”.

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The producers assure in their press release that their decision takes into account “the current fundamentals of the oil market”.

It must be said that the high prices are a blessing for the finances of producers abused at the height of the Covid-19 crisis.

However, expensive oil could embarrass them since it fuels inflation and threatens the recovery of economies in fragile recovery, a serious risk for demand in the medium term.

And this is not the only counterproductive effect: high prices attract new competitors to the market with deposits that have suddenly become profitable and encourage buyers to turn to other sources of energy, possibly cleaner.

In a recent study, analysts at Morgan Stanley estimated that the threshold of 80 dollars a barrel marked the entry into a zone of “destruction of demand”. But in the current context, Goldman Sachs sees Brent soar to 90 dollars by the end of the year.

– To want and to be able to –

But did the cartel have a choice? More and more doubts are being heard about the real capacity of OPEC + to increase production at a more sustained rate.

“Perhaps the most important question is whether OPEC + will in fact be able to achieve its goal,” responded Kieran Clancy, analyst at Capital Economics.

Most members respect quotas perfectly, even producing less than what they are entitled to.

For a group more subscribed to overruns, this indicator suggests that OPEC + is already close to its limits in terms of volume growth, even if it still displays a daily production “reserve” of nearly five million barrels.

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Nigeria, Angola and Libya “continue to face their eternal infrastructure, investment and security problems,” Helima Croft of RBC explained last week.

Members of the producer alliance have also agreed to meet on November 4.

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