OPEC+ said it will stick to its oil-output cuts amid mounting concerns over Covid lockdowns in China and uncertainty over Russia’s ability to export crude
A weekly must-read of news, analysis and exclusive data focused on the intersection of business, money and climate.Oil prices fell on Friday after the EU agreed to the cap, suggesting traders don’t feel the mechanism will force much Russian oil out of the market and cause a supply issue. Russian crude has traded at a steep discount this year, with Argus Media, which assesses commodity prices, pegging the price at about $48 a barrel.
The U.S. and its allies designed the price to cut into Moscow’s oil revenues while keeping Russian oil, a key part of global supply, available on the market. It aims to take advantage of the concentration of maritime services in the West to try to curb Moscow’s ability to wage war in Ukraine. The U.S. and its allies set a price cap on Russian oil to stem revenues but some fears it could cause a disruption in global supply.However, there are concerns that the cap—combined with an EU embargo on Russian oil that also begins Monday—could severely disrupt supplies. Russian officials have repeatedly threatened to cut off oil exports in response to the cap, arguing that the sanction distorts market dynamics and could lead to a major increase in global prices.
Some OPEC delegates say they trust estimates that Russian exports of crude could fall by over 1 million barrels a day because of the price cap. The prediction is consistent with the International Energy Agency, which advises consumer nations and foresees a decline of 1.4 million barrels a day. Russian oil production stood at 9.9 million barrels a day in October.What will be the impact of a price cap on Russian oil? Join the conversation below.
Sunday’s meeting had been planned to take place in person at OPEC headquarters in Vienna, but was being held remotely to avoid negative media scrutiny, the delegates said. OPEC+’s decision to cut production in October angered the White House and congressional Democrats, who said it undermined global efforts to blunt Russia’s war in Ukraine and viewed it as a political slap in the face to President Biden ahead of midterm elections.
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