The OPEC Plus group of oil producers, which includes Russia, will meet on Sunday on the eve of new Western attempts to curb Russian oil revenues.
AYESHA RASCOE, HOST:
Members of OPEC+ today concluded a closely watched meeting. OPEC+ is the group of oil exporters that includes countries such as Oman, Azerbaijan and Russia. And the meeting comes just ahead of new attempts by the West to limit Russia’s oil profits to deprive Moscow of the money it uses to fight in Ukraine, efforts that begin tomorrow, when the European Union stops importing Russian oil by ship. And that is most of the oil that Russia sells to Europe. Jackie Northam, NPR’s international affairs correspondent, has followed the story and now joins us.
Good morning Jackie.
JACKIE NORTHAM, BYLINE: Good morning, Ayesha.
RASCOE: So, Jackie, these countries could have cut production like they did in October, despite pleas from the White House. This time it seems they decided not to make any changes. Why is that?
NORTHAM: Well, you know, there’s a lot of uncertainty in the global oil market right now. And OPEC+ may just want to see how things play out in the coming weeks and months. And one of those uncertainties is Russia. You know, Russia is one of the world’s largest oil producers. And come tomorrow, one of its main customers, the European Union, says: we don’t want your crude oil anymore. In addition, you have the group of seven industrialized countries that impose a price cap on Russian crude oil sold in the rest of the world. And that limit is $60 a barrel. So suddenly there could be major shifts in the global oil market. And that creates a lot of uncertainty. And OPEC+ has decided to just hang on and keep production as it is.
RASCOE: So these plans for an EU ban on Russian imports and the price cap you mentioned, I mean, that’s very ambitious. For example, is there a fear among OPEC+ members, including, as we mentioned, Russia, that these plans might work?
NORTHAM: Oh, sure. It is likely that the EU ban on oil will work. Europe has been weaning itself off Russian oil for months and trying to set up new sources. So it doesn’t look like that ban will be revoked. The maximum price is less certain.
This is a plan led by the US Treasury Department. And I’ve talked to a lot of analysts over the last few weeks, and there’s skepticism. You know, starting with countries like China, India, Turkey, which have been on a bargain hunt for Russian crude oil at a very low price. None of them signed on to this price cap agreement. You know, there are also enforcement issues. Many illegal sales are already taking place, such as ship-to-ship transfers in the middle of the night and forging documents. And Russian President Vladimir Putin has said he will not sell to a country that participates in the price cap. So all this, you know, could shock global markets and drive up prices.
RASCOE: But oil exports are one of Russia’s main sources of income. So how does the Kremlin intend to make up for that if it doesn’t export to countries that adhere to the price cap?
NORTHAM: Well, Russia is quietly building what has been described as a ghost fleet of tankers. And you know, these are old ships that have been refurbished and put back into service. And China is doing the same. So this will help keep some of the Russian oil moving, you know, but there aren’t nearly enough of these ghost ships to move all the oil that Russia needs to make up for the shortfall created by the EU ban and price cap.
RASCOE: So these actions against Russia would make some members of OPEC Plus nervous that the West could do this to other countries in the future, right?
NORTHAM: Well, I imagine that would be a consideration. You know, a price cap has never been attempted before. Usually the cap is on volumes, and that’s what we’re seeing with Venezuela and Iran. There is probably some concern among OPEC+ members, say Saudi Arabia, that the same thing could happen to them. You know, these OPEC+ decisions are not just about oil. It’s also about politics. For example, members like Saudi Arabia and the United Arab Emirates are trying to help support oil prices, which could help Russia and anger the US.
RASCOE: You know, in the few seconds left, what about other factors that OPEC+ might have had in mind these days outside of the EU and the G-7 that decided to keep production where it is?
NORTHAM: Well, the demand for oil is down a bit right now. There is high inflation. Economic growth has slowed. Look at China. You know, production has shrunk there. So needs oil. So, you know, that’s probably all taken into consideration by OPEC Plus today.
RASCOE: That’s NPR’s Jackie Northam. Jackie, thank you so much for joining us.
NOORDAM: Thank you.
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