June 20, 2021

Oil price rises in wake of economic recovery

A year ago, a barrel of North Sea Brent traded around $ 35 (around $ 29), after falling below $ 20 during the first wave of Covid-19 and spring containment , which had stifled economic activity and demand for black gold. Unheard of since 2002. A year later, the crude oil price traded in London went back above the $ 70 mark (57 euros), driven by a recovery that the Organization for Economic Co-operation and Development (OECD ) has just revised upwards for this year (+ 5.8%).

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The improvement did not escape the Organization of the Petroleum Exporting Countries (OPEC) and ten other non-OPEC countries, including Russia, which in 2016 formed a cartel called “OPEC +” to weigh in against consuming countries. . But they remain cautious and monitor the development of the market on a month-to-month basis. Gathered Tuesday 1is June by videoconference, it did not take them half an hour to renew their April decision, “Taking into account the market fundamentals observed” : gradually loosen the valves by the end of July, ie an additional 2.2 million barrels.

The two biggest exporters of crude, Saudi Arabia and Russia, give themselves extra time to decide on a further increase in production

The markets have validated this strategy: the barrel of Brent for August delivery gained 1.34% (to 70.25 dollars) and the WTI deliverable in July 2.11% (to 67.72 dollars). Saudi Arabia and Russia, the two largest exporters of crude, are giving themselves extra time to decide on a further increase in production. It seems certain that they will put more black gold on the market in the second half of the year, a decision that could be taken on 1is July, at the next OPEC + meeting. Prices at the pump, especially in France, where taxes are high, should therefore remain high.

On the eve of the summit, the secretary general of OPEC, the Nigerian Mohammed Barkindo, acknowledged that uncertainties still weigh on prices, citing especially the health crisis. Large countries like India, the world’s third largest consumer of crude behind the United States and China, Thailand and Japan are far from having finished with the Covid, just like Brazil and Peru. Vaccination is progressing, of course, but the appearance of more transmissible variants is making oil market players nervous, who noted a slight drop in demand in April.

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