The decision of part of the OPEC+ alliance to cut the cartel’s production by 1.16 million barrels per day on April 2 came as a surprise to many Western analysts. The surprise was aggravated by the fact that only in October 2022, an agreement was reached between 23 oil exporting countries of the super-OPEC alliance to reduce world supplies by 2 million barrels per day, and on March 25, Turkey was obliged to comply with the decision of the Paris Arbitration Court, stopping supplies oil from Kurdish northern Iraq, resulting in the withdrawal of 470,000 barrels per day from international markets.

If we take into account the decision of Russia, which on February 10 announced a reduction in its daily production by 500 thousand barrels. until the end of 2023, the total reduction of OPEC + will be 1.66 million barrels. for the first quarter of 2022, or a total of 3.66 million barrels as of October 2022, which is equivalent to 3% of world production over the past five months. The reaction of the markets was expected. The price of Brent rose from $73 per barrel to $85 per barrel in a few days, which will inevitably affect gas futures in the EU. on forward contracts of the next quarter – four months.

Motivations for OPEC+ vary by country and region, as the coalition, due to its breadth, has structural problems with discipline and coordination in decision making and implementation. It’s not just the 10 non-OPEC+ countries that are not members of OPEC. This also applies to the prominent oil cartel of 13 oil-exporting countries. These coordination problems have led many Western observers to underestimate the importance and power of an organization that, on paper, controls more than 50% of world production. In fact, both after 2016 and especially after 2022, the growth of unconventional oil production in the United States and acute conflicts within OPEC (Iran-Saudi Arabia) and within the Arab OPEC, i.e. OPEC (boycott of South Arabia – UAE against Qatar), weakened the power of the cartel and the ability of Saudi Arabia to impose its positions in OPEC. To fill this power vacuum, Riyadh was forced in 2016 to move into a tactical alliance with Russia when it was admitted as an observer to OPEC, which has now taken on a strategic dimension with the entry into force of the EU. – The United States will impose a restriction on the export of Russian oil in December 2022.

Tackling this constraint, combined with Saudi Arabia’s continued need for more revenue – especially after its investment in Credit Suisse was undermined – is the cornerstone of a strategic alliance between Riyadh and Moscow that seeks to set an international price floor in the range of 80 up to $100 per barrel so that Russia can remain competitive in Asian markets and continue to finance its military needs. The decisive factor in the success of this strategy remains not so much the unworkable ceiling between the US and the EU, but the return of Chinese demand from its pandemic restrictions.

Dr. Theodoros Tsakiris is Associate Professor of Geopolitics and Energy Policy at the University of Nicosia.