For more than six years, the prices of a barrel of crude have entered a phase of slump which has notably weakened the revenues of producing countries and affected the finances of companies in the sector.
The measures taken by OPEC to stabilize them are gradually bearing fruit.
Saudi Arabia said it would maintain its unilateral one-million-barrels-per-day production cut quota for April’s account.
A decision that comes at a time when OPEC was holding talks to extend this reduction as early as April, which has played an important role in stabilizing the market over the past two months.According to analysts, a reduction of 500,000 barrels per day was badly needed.
The other 500,000 barrels per day could be used to cover the margins of the possible non-adherence of the other members of the group to the reduction quotas.The move is further proof of Saudi Arabia’s commitment to price stability.As a result, the market responded positively by pushing prices up to levels not seen since January 2020. Brent hit $ 68 per barrel, while US crude hit $ 64.80 per barrel.
Saudi Petroleum Minister Prince Abdulaziz bin Salman said he was delighted with the impact of the move on prices. He acknowledged that since January, oil prices have behaved well, but called for caution and vigilance, to maintain reasonable price ranges. Oil prices have risen about 30% since the start of the year.In addition, Russia was authorized to increase its quota by 130,000 barrels per day and Kazakhstan by 20,000.“Soaring prices could accelerate the transition to renewables if the price goes well above $ 70 a barrel for an extended period.
It’s a bit of a gamble on the part of the Saudis, because they could hasten their own demise from the oil scene by turning more quickly to renewables, ”said Michael Hewson, analyst at CMC Markets.OPEC expects a solid recovery in demand after the coronavirus pandemic, and measures to curtail production before this recovery takes effect bodes well for prices. Among other things, they make it possible to reduce the pressure of stocks on prices.According to Goldman Sachs, Brent will hit $ 75 in the second quarter and $ 80 in the third.
Source Ecofin Agency