Oil prices rose again on Monday, strengthened by a postponement of the OPEC+ alliance's production increase as well as by threats made by the Iranian authorities against Israel. A barrel of Brent from the North Sea for delivery in January appreciated by 2.71%, to close at $75.08. A barrel of American West Texas Intermediate (WTI) due in December gained 2.85%, to $71.47. The benchmark American variety thus recorded a fourth positive session in a row.
For Andy Lipow, of Lipow Oil Associates, this new boost is primarily due to the decision of eight members of the OPEC+ group to postpone the increase in their production by one month. This is the second postponement after a first postponement from October to December. These eight countries, including Saudi Arabia, the most influential country in the Organization of the Petroleum Exporting Countries (OPEC), and Russia, a partner in the OPEC+ agreement, have planned to gradually return to 2.2 million barrels of production cuts. The start of this process must therefore now take place at the beginning of January, and no longer at the end of December as planned so far.
Geopolitical risk premium
“They always left open the possibility that in the event of prolonged pressure on prices, they could postpone the increase” production, recalled Andy Lipow. “If there was suddenly a supply crisis, they could decide to increase their production at the next meeting” of the organization, on December 1, considers the analyst.
OPEC Secretary General Haitham al-Ghais said he was optimistic on Monday about the health of global demand. “The American economy is doing well”commented the manager on the sidelines of the ADIPEC conference in Abu Dhabi. “Everyone talks about the slowdown in China, but China is doing well”said Haitham Al-Ghais. Furthermore, for Andy Lipow, “the statements coming from Iran over the weekend added a bit of geopolitical risk premium” at the price of black gold.
Iran's Supreme Leader, Ali Khamenei, has promised a “scathing response” to Israel for its “actions against Iran and the resistance front”. The spokesperson for the Revolutionary Guards, the ideological army of Iran, Ali Mohammad Naini, spoke of a response “firm, thoughtful and powerful” to the Israeli offensive of October 26 on Iranian military sites. Iranian President Massouf Pezeshkian nevertheless indicated on Sunday that if Israel accepted a ceasefire with Hezbollah and Hamas, allied movements of the Islamic Republic, “this could influence the intensity and nature of our response”.
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