OPEC’s August JMCC meeting is nearing, and with markets tightening as planned, OPEC isn’t likely to announce deeper production cuts
OPEC’s next JMCC meeting is set to be on August 3rd.Russia is gunning for higher OPEC+ oil prices so that it may continue to offer a discount at a level higher than the G7 price cap.Following the series of crude oil production cuts by OPEC+ since last October, its Joint Ministerial Monitoring Committee is due to meet on 3 August to assess the state of the global oil market, according to several industry sources spoken to exclusively by last week.
Since the creation of OPEC in September 1960, its main aim – and that of its successor OPEC+ - has been to keep oil prices as high as possible for as long as possible, without jeopardising its relationships with core clients and/or geopolitical sponsors. OPEC’s longstanding leader Saudi Arabia needs prices as high as possible because it is still suffering from the deep structural financial damage it incurred during the 2014-2016 Oil Price War that it started, as analysed in depth in .
Saudi Arabia enjoys the lowest lifting cost of crude oil in the world at US$1-2 per barrel , the same as Iran and Iraq, but has an official fiscal breakeven oil price currently much higher than that - of US$78 pb of Brent in 2023, in fact. Unofficially, the oil price needed is much higher again, given the ever-growing list of socio-economic projects required to keep the Saudi populace broadly supportive of the royal family.
Given these factors, then, Russia’s strategy has been very straightforward, but very effective: persuade Saudi Arabia and the other core OPEC members to increase the group’s oil prices as much as possible while at the same time selling its own oil at a discount to this price – but one that it still above the official oil price cap.
Russia, then – which co-chairs OPEC+’s JMMC that will meet on 3 August – can be expected to push for more collective production cuts from an already-willing Saudi Arabia, which is the other co-chair of the Committee. Russia, with the support of China, has another reason behind pushing Saudi Arabia towards ever-increasing oil prices, which is that it incenses the U.S. and its allies in the West and the East. The U.S.
Belgique Dernières Nouvelles, Belgique Actualités
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