Despite uncertainty about the effect of new Western sanctions on Moscow, the OPEC oil cartel led by Saudi Arabia and allied producers, including Russia, have maintained their production targets.
At a meeting of oil miners on Sunday, the decision to keep the status quo was taken ahead of the planned launch of two measures that would have targeted Russia’s oil earnings after its invasion of Ukraine.
These include a ban on all Russian oil from the EU and a $60 price cap (PS49), on each barrel of Russian crude oil that is imposed by G7, a group of world leaders.
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OPEC+ is a consortium of the Organisation of the Petroleum Exporting Countries and its allies, including Russia. In October, it angered the US, and other Western countries when it agreed to reduce output by two millions barrels per day. This represents about 2% of the world’s demand from November through the end of 2023.
This would cause higher prices in a time when already high energy costs are driving Washington to accuse the group that it was siding with Russia, despite Moscow’s attack on Ukraine.
OPEC+ claimed it had reduced output due to a weaker economic outlook.
Oil prices have fallen since October because of slower Chinese and global growth, and higher interest rates. Market speculation has led to the possibility that the group might reduce output.
The group of oil producers decided, however, to maintain the current policy.
The key ministers of the ministry will meet next at the beginning of February to form a monitoring committee. A full meeting is planned for 3-4 June.
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G7 countries and Australia agreed to a price cap on Friday to deprive Russia’s leader Vladimir Putin of revenue while keeping Russian oil flowing into global markets.
Moscow said that it will not sell oil below the cap, and was looking at how to respond.
Many analysts and OPEC ministers believe the price cap is confusing. Moscow has been selling its majority of its oil to countries such as India and China, who have not condemned the war in Ukraine.
Sources claim that the price cap was not discussed at Sunday’s OPEC+ meeting.
Russia’s deputy prime Minister Alexander Novak stated that Russia would prefer to reduce production than supply oil below the price cap and warned that the limit could affect other producers.
Several OPEC+ member are believed to have voiced frustration over the cap and said that the West could use the measure against any producer.
Washington claims that the measure was not aimed towards OPEC.