OPEC+ agreement raises oil prices to record highs
The oil price has started the year maintaining the upward dynamic. The increase, which is the highest since February, follows the voluntary cutback in production by Saudi Arabia, as well as the decrease in crude oil inventories in the United States during the first week of the year.
The West Texas Intermediate (WTI) recorded a 4.85% rise in its prices, and closed the session at $49.93 per barrel. Brent crude increased by 4.9% to $53.60 per barrel, unprecedented numbers since the beginning of the pandemic.
The oil price rose for the sixth time in a row, aggravated by the riots in the US Capitol. The insurrection led to a reduction in contract earnings after the market closed. Iran's detention of an oil tanker as a result of "repeated violations of marine environmental laws", according to its claims, also conditioned the rise.
For its part, the price of diesel has risen by 1.13% to 1.069 euros per litre, also in its sixth consecutive increase. Since the second week of November the price of diesel has risen by 5.4%, while petrol is 3.7% more expensive.
Fuels thus consolidate the increases that have already begun to be registered throughout the summer. The increases have occurred since last May, when they fell to a minimum due to the collapse recorded during the confinement. With this new rise, the litre of petrol remains around 10.4% more expensive compared to May prices. The price of diesel, for its part, has risen by 9% compared with May.
The rise in price stems from the agreement reached between the Organisation of Petroleum Exporting Countries (OPEC) and its allies, led by Russia. After two days of negotiations, the members decided to reduce oil production by 500,000 barrels a day in order to launch 7.2 million barrels a day onto the market, as agreed in December.
Production so far has been 7.7 million barrels per day. In February and March, OPEC+ production will be limited to 7.125 million barrels per day and 7.05 million barrels per day respectively. In addition, they agreed to review production on a monthly basis.
Saudi Arabia will make a greater effort and will not increase its production. The Saudi energy minister, Abdulaziz bin Salman, acknowledged that his country will "voluntarily" cut its production by one million barrels a day between February and March, including the corresponding adjustment. Saudi Arabia will maintain its supply of crude oil at 8.125 million barrels per day during the months of February and March. Meanwhile, countries such as Russia and Kazakhstan will be able to increase their production by 65,000 and 10,000 barrels a day during this period.
The OPEC and its allies agreed on a drastic cut in production to prevent prices from collapsing during the economic recession triggered by the pandemic. Following last Monday's summit, which led to higher fuel prices, the members of the OPEC+ agreed to meet again on 4 March.
Based in Vienna, the organisation is experiencing strong pressures that may lead to tension and conflict. Increased production would bring a number of revenues for producing countries, economically affected by the price drop, but experts warn that pumping too much too soon could "undermine the modest price increase".