BAKU, Azerbaijan, January 17. OPEC and OPEC+ will not change their present production policies despite the tension in the Middle East, Francis Perrin, Senior Fellow at the Policy Center for the New South (PCNS, Rabat) and at the French Institute for International and Strategic Affairs (IRIS, Paris), told Trend.
“The Houthis' attacks against ships in the Red Sea began in the second half of November 2023. Between the first attacks and 16 January the price of Brent fluctuated between around $75 per barrel and $82/b. Clearly the oil markets are not really impressed, at least so far. There are two main explanations behind this serenity of the markets: the announcement of the Operation Prosperity Garden, led by the U.S. and which was launched on 18 December 2023, and the fact that, as of today, world oil production, world oil exports and oil infrastructures have not been negatively affected despite numerous attacks by the Houthis against ships near Yemen. There is no shortage of oil on the world market despite the Houthis' strategy over the past two months, the war in Gaza and the war in Ukraine,” he said.
The expert believes that things could change of course if the situation in the Red Sea was to worsen and if the tensions in the region were to result in a new conflict in the Middle East or if Iran, which is supporting the Houthis, was to be directly involved in the Israel/Hamas war or in a possible war between the U.S. and the Houthis.
“But Iran's strategy is rather to avoid a direct military involvement against Israel and/or the U.S. and to use several proxies in the Middle East (the Houthis, Hamas, Hezbollah and various Shiite militias in Iraq and in Syria). As there is so far no reduction in world oil supply and no material risk of an oil shortage, OPEC (12 countries after the departure of Angola at the beginning of this year) and OPEC+ (22 countries, including all the OPEC member states) will not change their present production policies, which were decided at the latest OPEC+ Ministerial Meeting on 30 November 2023. Oil output cuts decided by several OPEC+ countries for the first quarter of 2024 and previous production cuts will remain valid. But, as always, OPEC and OPEC+ countries, especially Saudi Arabia, and the OPEC Secretariat in Vienna will closely follow the world oil market in order to be ready to do what could be required if the situation was to worsen,” Perrin added.
As far as Russia is concerned, the expert pointed out that growing tensions in the Middle East are very useful because less attention is devoted to the war in Ukraine and oil prices are at a rather high level.
“Without these tensions in and around the Red Sea oil prices would very probably be lower due to the state of the world economy,” he concluded.
Follow the author on X: @Lyaman_Zeyn
