In the end, the yes votes prevailed. Until the end of 2025 OPEC+ will apply a cut on oil production, equal to approximately two million barrels per day (mb/d), to raise prices, which have no longer reached the peaks of 2022. Given the numerous interests at stake, the decision had to be carefully thought out, in order to avoid repercussions on the actors in the supply chain. On the one hand, some countries intended to continue along the same line. On the other hand, Iraq and beyond opposed the extension, for fear of gaining even less.
The additional cuts
In addition to the extension, the United Arab Emirates will reduce the quantity by another 300,000 mb/d. They will probably then move forward into 2025 i additional cuts sanctioned by Russia, Saudi Arabia, Algeria, Oman, Kazakhstan, Kuwait and Iraq. Despite the agreement reached, challenges remain. According to Rystad Energy analyst Mukesh Sahdev, OPEC+ will have difficulty living up to its intentions. In the first quarter, both Iraq and Kazakhstan exceeded their respective quotas, as did Russia in April. Exact figures have not been made public, at least for the moment. Not a surprise, because countries usually disclose them separately.
Yet, prices remained stagnant, around $80 a barrel for both North Sea Brent and US WTI. With the spread of electric cars, which, however, is registering shocking numbers in Italy, and the gradual renunciation of old general combustion sources, operators have less room for manoeuvre. The 100 dollars of September 2022 remain distant, even after the conflict that broke out in Gaza. Due to slowed industrial activity and mild winter temperatures, the International Energy Agency (IEA) corrected the values downwards, while OPEC+ reiterates its estimates for 2024,
The drop in prices depended on a number of factors, including the increase in production in the United States, Canada and Brazil. Which could compensate for the contraction established by OPEC+ of which they are not part. In short, it is a risky move aimed at shaking up the sector, which has ended up in a sort of limbo in recent years, also because awareness of environmental problems, also caused by means of transport, has increased. As a result, political bodies, including the European Union, are trying to push for a change. The call for internal combustion vehicles in 2035 pursues this objective, as do the car incentives also confirmed by the Italian Government in 2024, which can be requested starting today via the specific online platform.
Not very calm Americans
Experts suggest that the cartel’s measure could push petrol prices higher in the coming months, especially in the USA where – explains the New York Sun – corresponds to approximately half the cost of a liter of petrol. The fluctuations are much smaller in Europe, where taxes make up a larger share of fuel costs. Although they fell a couple of weeks ago, overseas inventories still remain well above 2023 levels. Inflation has left many people unhappy about the state of the circular economy, despite fairly strong growth and low unemployment.
