While OPEC countries are struggling to increase oil production, the price of crude is falling, reaching less than 100 dollars on Thursday. A drop of around 9% has occurred since the death of the Secretary General of OPEC, the Nigerian Mohammed Barkindo.
Between the fall in Chinese demand for oil, and the recovery of the US dollar, oil prices have been falling steadily for two weeks. An unexpected setback, as oil prices rebounded on July 4, reaching more than 110 dollars for a barrel of Brent and WTI.
However, the following day, the outgoing Secretary General of the Organization of the Petroleum Exporting Countries (OPEC), the Nigerian Mohammed Barkindo, died. Since then, oil prices have continued to fall. The price of Brent fell 9,5% the day after his death. As for WTI, it is today at just over 95 dollars.
Both prices found themselves below the $100 threshold last week, falling further this week. The specialists of the JP Morgan Chase holding company, however, expect the barrel to drop to 65 dollars before the end of 2022, until reaching 45 dollars in 2023.
Barkindo's death has not been cited as a factor in the fall in oil prices by Wall Street moguls.
However, Mohammed Barkindo was not only the architect of OPEC+, in particular the reintegration of Equatorial Guinea, Congo and Gabon within the organization, but had also stemmed several crises between the producing countries. His death therefore undoubtedly created a certain fright among consumer countries, in particular the United States.
Mohammed Barkindo, the subtle puppeteer of OPEC
Indeed, Mohammed Barkindo went through everything within OPEC. The 2016 recession, the tensions between Iran and Saudi Arabia, the war between the countries demanding regulation and the others – like Ecuador or Nigeria – which can do without it…
For better or for worse, Mohammed Barkindo played the role of appeasement in all these conflicts. Not only keeping the integrity of OPEC, but bringing in new member countries as well. A diplomacy that earned him his second term.
Shortly before the start of the conflict between Russia and Ukraine, Mohammed Barkindo gave way to Kuwaiti Haitham Al-Ghais. When the latter represented the Kuwait Petroleum Corporation (KPC) in China, Mohammed Barkindo was a member of the OPEC council responsible for relations with China. He was reportedly a mentor and protector for Al-Ghais, and supported his candidacy despite the displeasure of the United Arab Emirates and Saudi Arabia.
Read: Congo-Algeria: new cooperation in the hydrocarbons sector
In return, Mohammed Barkindo had convinced Venezuela, Congo, Angola and Algeria to increase their production, in addition to Kuwait and Nigeria of course. The aim was, for Barkindo, not to create a split between the members of OPEC and those of the Gas Exporting Countries Forum (GECF). But also to reassure the first oil consumers in the world: the United States, which feared having to give in to the Texan oil lobbies in view of the drop in production, and China, which above all wants the expansion of the GECF and OPEC are done without offending the UAE and Saudi Arabia.
Indeed, the Western countries and their traditional allies within the two energy organizations “come out the losers” of the global crisis. While on their side, Algeria, Qatar, Angola and Kuwait are constantly getting closer. India too, which has become the favorite target of several oil-exporting countries, benefits greatly from financial market commissions.
The fall in oil prices, very bad news in Africa
So with the death of Mohammed Barkindo, the balance within OPEC is more threatened than ever. China, which is Kuwait's largest trading partner, is expected to keep the north with Haitham Al-Ghais controlling production regulation. But the United States seems to be taking a step back. Trading in the oil sector is in freefall, despite the rise of the dollar. Washington is therefore clearly taking the risk of further increasing the prices of petroleum products, hiding behind a desire to delay purchases, until production catches up with demand.
A handling of the petrodollar which is not new for the United States. But who is likely to irritate, especially in Africa.
Indeed, Algeria, Congo-Brazzaville and Angola in particular rely heavily on rising prices for other political and diplomatic purposes. For Algeria, it's about finding European investors who are brave enough – desperate? – to invest in the AKK gas pipeline. The latter, which will cross Niger and Nigeria, in return gives Algeria a certain degree of control over oil exploration in sub-Saharan Africa. It is also a competing project of the Atlantic Backbone – the Nigeria-Morocco pipeline – funded by OPEC.
As for the Congo, which currently chairs the OPEC Conference, it will see its cooperation with Algeria and Italy threatened by the drop in oil prices. As for Angola, whose president João Lourenço is playing his second term on August 24, the fall in crude oil prices threatens even social peace. Indeed, the Angolan GDP depends on it, and the state coffers have been in the red since 2014, despite the increase in development.