The oil market imposes its law against the wishes of OPEC

Two attempts;

two losses.

That is the balance of the expanded version of the Organization of the Petroleum Exporting Countries (OPEC+) in its recent struggle to keep crude prices high.

One month after the cartel put the scissors on its production to stabilize the price, the

has returned to the starting point: the reference barrel in Europe is exchanged today for 72 dollars, 15% less than what it cost before that the enlarged version of the group, led by the world's two largest oil exporters —Saudi Arabia and Russia—, announced a cut of 1.1 million barrels per day on its production.

It is, in gross numbers, something more than 1% of what the world consumes.

The result of this latest attempt to raise prices is exactly the same as the one harvested just over half a year ago.

At the beginning of October, OPEC+ announced a cut in its production of two million barrels per day, to which the market initially responded with strong increases that were soon neutralized.

Both then and now, the main analysis houses glimpsed a quasi-structural imbalance between supply and demand, with the balance tipping on the side of the latter.

But the market, stubborn, insisted —and insists— on going against the consensus and the cartel.

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"The gains in the price of oil as a result of the OPEC+ cut have evaporated," notes Jorge León, vice president of Rystad Energy and a former cartel official, who sees two possible explanations: Russian production, which, despite the sanctions , does not give truce and the worsening of the global macroeconomic climate.

“Fundamentals suggest a rise in prices as summer approaches, but the US economic data is not very optimistic and markets are on hold,” he explains.

That future rise, however —and except for a first-order surprise— will be far from the highs of June last year, when Brent

over 120 dollars per barrel.

Especially if the signs of a slowdown in the West continue to grow by the day.

"Confidence has fallen that the production cuts announced by OPEC+ will really take place," completes Viktor Katona, head of oil analysis at the specialized firm Kpler.

“You only have to look at what happened in Russia: in March, its derivatives exports were the highest ever, and its crude sales were as high as in previous months.”

Moscow's promise was to cut half a million barrels already last month.

Something that, in Katona's opinion and in view of the market dynamics itself, is "quite unlikely" to have occurred.

Russia's production data remains a mystery to all but the Kremlin.

Despite the recent drop in the price of crude oil and the also recent signs of cooling demand, Moscow —along with Riyadh, who really pull the strings of the cartel— has slipped its conviction that new production cuts would not be necessary.

“Only a month ago we made a decision [to cut the offer], which will take effect in May,” Alexander Novak, deputy prime minister and former strongman of Vladimir Putin for energy issues, dropped last week.

OPEC-West clash

Basically, this struggle is nothing more than a struggle between Saudi Arabia and Russia —on one side— and the West —on the other.

After several decades in which Riyadh has almost constantly gone hand in hand with Washington in major energy and geopolitical decisions, the dynamics have taken a radical turn in recent times, in which the petromonarchy has broken the deck in its relationship with the First world potency.

Again, the Joe Biden Administration has responded to each drop in OPEC supply by releasing barrels from its strategic reserves.

This clash between blocks lived a new chapter last week, with the International Energy Agency (IEA, the

energy par excellence in the Western sphere) and OPEC as protagonists.

In general terms, the story is written as follows: the IEA secretary general asked the cartel to "exceed caution" in its movements, because higher oil prices weaken global growth and "give additional impetus" to the deployment of the electric cars, future—and, increasingly, present—beast noire for crude oil exporters.

The response was not made to wait even 24 hours: in very similar terms, the head of OPEC, Haitham Al Ghais, called on the Agency to be "very careful" when discouraging interest in crude oil exploration and production: " If anything can increase volatility, it is the repeated calls by the IEA to curb investment in oil.

less inflation

The fall in the price of crude oil is good news both for final consumers —not only those who have a car benefit: the rises and falls of crude oil are also transferred, sooner or later, to the shopping cart— and for the inflation on both sides of the Atlantic.

And it adds to another trend that is also reducing the pressure on fuel prices: the entry into action of new refineries in the United States and in several countries in the Middle East.

A fact that is being felt, above all, in diesel prices, the ones that had most tightened the Russian sanctions and those that have fallen the most in recent weeks.

The long term does not row, precisely, in the direction that the members of OPEC would like.

Last week, the IEA described the expected sales of electric cars in 2023 as a “boom” – although they are still only one in six new registrations – and quantified the expected reduction in crude demand in 2030 at five million barrels per day. In other words: by the end of this decade, the electrification of the global mobile fleet will already have dealt a blow five times greater than the last cut of the cartel.

And that is only the beginning.

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