Before EU embargo against Russia: OPEC+ sticks to production volume

Status: 05.12.2022 06:32 a.m

EU sanctions against Russia’s oil revenues came into effect today. The OPEC+ countries have nevertheless confirmed their previous targets for oil production. However, a specialist committee wants to review the funding strategy every two months.

The major oil exporting countries are leaving current production levels unchanged. At an online conference, the oil alliance OPEC+ confirmed the decision made in October to produce two million barrels (159 liters each) less per day by the end of 2023. The 23-nation alliance announced its decision a day ahead of an EU boycott of most Russian oil and a price cap of $60 a barrel for Russian oil experts coming into effect that the EU and G7 agreed on.

The EU and G7 measures are intended to reduce Russia’s oil revenues because of its war of aggression against Ukraine. At the same time, the price cap is intended to prevent global oil prices from rising once the embargo comes into force. Russia is also part of OPEC+.

Russia does not want to accept a price cap

Russian Deputy Prime Minister Alexander Novak confirmed on state television that Russia would not accept the price cap on its oil. He threatened countermeasures.

Russia sees the instrument as non-market economy and will develop a mechanism to ban the use of the cap, Nowak said. He did not give details. However, Nowak said Russia is ready to scale back oil production if countries want to apply the cap.

Cartel with almost 40 percent market share

An OPEC+ expert committee wants to review the cartel’s production strategy every two months, it said after the oil alliance conference. Should the market situation require it, consultations would take place immediately at ministerial level. The next regular ministerial meeting is scheduled for June 4, 2023.

The influence of the cartel, which expanded to include ten non-OPEC countries in 2016, remains significant. Allianz has a global market share of around 40 percent.

OPEC+ sticks to funding strategy

Silke Hahne, ARD Vienna, December 5, 2022 5:42 a.m

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