French analyst says measures against inflation tend to make oil production more expensive in Europe

OPEC+ member countries decided to maintain their oil production levels this Sunday (4) amid an unstable economic context and on the eve of the sanctions against Russian oil. RFI received information from Philippe Sébille-Lopez, the director of the company Géopolia, who is an expert in energy geopolitics and author of the book “Geopolitics of Oil”, who spoke about the impact of the decision.

OPEC+ member countries decided to maintain their oil production levels this Sunday (4) amid an unstable economic context and on the eve of the sanctions against Russian oil. RFI received information from Philippe Sébille-Lopez, the director of the company Géopolia, who is an expert in energy geopolitics and author of the book “Geopolitics of Oil”, who spoke about the impact of the decision.

Representatives of 13 members of the Organization of the Petroleum Exporting Countries (OPEC) and 10 of their allies, including Russia, agreed to keep prices stable in October, and agreed to continue the cut of two million barrels a day until the end of 2023. . The decision, announced after a quick video conference meeting, angered the US government, which is seeking to lower prices at gas stations.

Since then, the two reference prices on the world market have fallen and are currently trading between US$80 and US$85, well below the US$130 per barrel agreed in March, shortly after the start of the invasion of Ukraine. “This confirms our strategy. It was the right way to act to stabilize the markets,” he adds in the statement.

The next OPEC+ meeting was scheduled for June 4, 2023, but the group was willing to hold a meeting before that date to take “urgent new measures” if needed.

“From a purely economic point of view, and given that the price of oil is driven by the supply-demand balance, all these measures to combat inflation, including the increase in interest rates, tend to make production even more expensive, especially in Turkey. Europe. This is perhaps part of the energy needs. limit”, analyzes Philippe Sébille-Lopez.

Impact on Russian exports

At the same time, Russia is outraged at the decision of the European Union, the G7 and Australia to limit the price of oil in the country.

The measure will come into effect on Monday (5), when the EU embargo on the shipment of Russian oil by sea will also begin. This will prevent tanker ship shipments from Russia to the EU, which account for two-thirds of imports. This will reduce Moscow’s funding for the war in Ukraine by billions of euros.

The price of Russian oil is currently trading at around US$65 a barrel, just above the US$60 ceiling announced by the international community, meaning a limited impact in the short term.

Underlining the French expert, “We will have to wait to see what the real impact of the measure on Russia’s exports will be.” “These measures reinforce an already existing situation and we will only see what the impact of diesel exports will be in February – the Russians were the main diesel exporter to the European Union”, the European analyst recalls. The Kremlin has threatened to suspend deliveries to any country that takes the measure.

price drop

In a bleak scenario and amid fears of a global recession, North Sea Brent oil and its American equivalent, WTI, have dropped 8% since the last OPEC meeting in October.

While OPEC+ has chosen to be cautious, UniCredit analyst Edoardo Campanella says the alliance may “take a more aggressive stance” in a warning to the West in the coming months. “This could aggravate the global energy crisis,” he warns. It could also anger Washington, whose diplomatic efforts to lower prices have failed.

(RFI and AFP)