Expensive oil is worrying in countries that consume black gold, led by the United States. The White House said on Wednesday that it was not satisfied with the current prices. She asked the major producer states to act to relax the market.
“Rising gasoline prices, if left unchecked, could harm the ongoing global recovery,” US National Security Advisor Jake Sullivan said. The Biden administration also fears a return of inflation.
A gallon of gas over $ 3
In the majority of American states, a gallon of gasoline (3.8 liters) has passed the symbolic bar of 3 dollars, in the midst of the “driving season”, the period of major automobile trips in the summer.
Of course, the OPEC countries and their ten Russian-led allies decided last month to increase their production. The 23 states, which together represent more than half of the global supply, will gradually loosen the floodgates. Their production will increase by 400,000 barrels per day each month until September 2022. A regular but very gradual increase, which may not be sufficient in the short term to balance the market.
“Simply not enough”
“At this critical moment in the global recovery, it is just not enough,” said Joe Biden’s advisor. Because if the cartel raises its production, it is from a particularly weak base. The 23 allied countries had drastically reduced their volumes, by more than 10%, in spring 2020 at the height of the health crisis. The return to “normal” is therefore still a long way off.
This is all the more true as Iran, one of OPEC’s biggest exporters, does not seem to be close to increasing its volumes. Negotiations with the Western powers with a view to an Iranian nuclear deal have still not been concluded.
The Iranian unknown
Contrary to what the markets expected, US sanctions against Tehran remain in place, prohibiting most countries from buying Iranian crude. Production in the Islamic Republic therefore remains constrained and this helps to support world prices.
“Although we are not members of OPEC, the United States will always turn to its international partners on important issues that affect our economic affairs and national security,” continued Jake Sullivan.
Brent yields 1%
This is not the first time that Washington has intervened in this way. Last March, Energy Minister Jennifer Granholm phoned her Saudi counterpart on the eve of an OPEC meeting.
Jake Sullivan’s statements lowered prices a bit on Wednesday: Brent yielded 1% at the end of the afternoon, dropping back below $ 70 a barrel. The real power of influence of the United States on OPEC production quotas remains to be proven, however.
“The fact that the national security adviser is speaking shows the importance given to the question by the Biden administration,” analyzes Francis Perrin, director of research at Iris. This public speech is accompanied by direct contacts with Saudi Arabia and the United Arab Emirates, the United States’ closest allies within OPEC. Washington hopes that its diplomatic weight will push the producing countries to amend their copy and increase their production more quickly. “
It is not certain, however, that the cartel will give in to the pressure. “OPEC remains cautious in the face of the uncertainty that reigns over the evolution of demand,” said Alexandre Andlauer, analyst at Kpler. The progression of the Delta variant could call into question the resumption of oil consumption, in particular in emerging countries with little vaccination. “