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Wednesday, November 30, 2022

Oil remains at its highest in three weeks after OPEC decision

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The agreement between Organization of the Petroleum Exporting Countries (OPEC) and an alliance led by Russia, a group known as OPEC + decided this Wednesday to cut production, which could stimulate price increaseswhich fell from their highest recorded since the Russian invasion of Ukraine.

The decision is also brought forward to a embargo of the European Union on Russian crude, tied to the fixing of bumpers at the maximum prices of this, a measure applied to contract financing to Russia during the invasion.

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After knowing the measure, the president of the United States, Joe Biden, noted: “I need to see the details. I’m worried, it’s unnecessary.” For her part, the White House spokeswoman, Karine Jean-Pierre, He stated: “It is clear that OPEC+ is aligning itself with Russia with today’s announcement.”

In addition, they described the agreement as “myopic” and analyze keep releasing strategic reserves to lower prices. This last measure was highly criticized by producers and exporters, as they pointed out that the reserve was created for supply chain disruption scenarios and not to control prices. They also criticized the possibility of reducing exports to increase the strategic reserves that are still at low levels.

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“We believe that the impact on prices of the announced measures will be significant,” he said. George Leon, of Rystad Energy in dialogue with Reuters. “In December this year, Brent is expected to exceed $100/barrel, compared to our previous forecast of $89.”

The Saudi Minister of Energy, Abdulaziz bin Salman, said the actual supply cut would be between 1 million and 1.1 million bpd. The Saudi part of the cut is about 0.5 million bpd.

Several OPEC+ members have struggled to produce at quota level due to lack of investment and the sanctions.

This scenario occurs in the face of the greatest concern for recessionpartly due to lower demand and activity, and european winterwhich prior to its start already faces significant price increases that forced governments to take measures to decouple rates and avoid their impact on the cost of living.

Source: Ambito

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