OPEC and its allies decided on Sunday to stick to their existing policy of curbing oil production just hours before new Western sanctions on Russian crude exports take effect.
The Organization of Petroleum Exporting Countries and other major oil producers, including Russia, said they would continue to limit supply by 2 million barrels per day, a policy enacted in October and started last month that will run through the end of 2023.
In a statement, OPEC said Sunday’s meeting — held via video conference — had reaffirmed October’s decision, adding that the group was ready to meet at any time to “address market developments if necessary.”
The cuts agreed in October, the largest since the start of the pandemic, have been criticized by the United States. The Biden administration called them “short-sighted” and said they would harm low- and middle-income countries by driving up energy prices.
Since then, oil prices have rallied instead as traders have focused on how China’s ongoing coronavirus lockdowns and fears of a global recession could hit demand.
However, the markets may be volatile in the coming days. The European ban on the import of oil from Russia by sea will take effect on Monday, adding additional uncertainty to the outlook for energy supplies.
The G7 countries, the European Union and Australia agreed on Friday to impose a price cap of $60 a barrel on Russian oil shipped to other countries that have not adopted an embargo. The move, which also takes effect Monday, is designed to deprive the Kremlin of revenue while preventing a price shock by allowing Russian oil to flow into some markets.
Moscow has previously threatened to retaliate by cutting off oil supplies to countries that adhere to the price cap.
What Ukraine says: Ukrainian President Volodymyr Zelensky called the decision to set the price cap at $60 a “weak position”.
“The logic is obvious: if the price limit for Russian oil is $60 instead of, say, $30, which Poland and the Baltic countries talked about, then the Russian budget will get about $100 billion a year,” Zelensky said. in a press release. his nocturnal address on Saturday. “This money goes not only to the war and not only to Russia’s continued sponsorship of other terrorist regimes and organizations.”