Status: 04/12/2022 09:13 a.m
OPEC would have to provide millions of barrels of additional oil to compensate for an oil embargo against Russia by Western countries. But the oil cartel doesn’t want that and says it’s not even possible at the moment.
Forgoing Russian oil seems to be difficult for EU countries at the moment. According to the OPEC oil cartel, it also sees no possibility of completely closing the gap in the oil supply with its own deliveries. It is also questionable whether the cartel would have any interest in it at all.
First coal, now oil?
After an embargo on Russian coal, the EU states now want to suspend oil supplies from Russia in order to make it more difficult for Russia to finance the Ukraine war. Russian oil is currently not subject to EU sanctions but is under consideration as part of another sanctions package. Australia, Canada and the USA, on the other hand, have already banned such purchases. Oil is easier to replace on the world market than gas supplies from Russia, on which Germany in particular is still heavily dependent.
However, the OPEC funding cartel cannot and does not want to close this gap on its own. The supply gap could reach more than seven million barrels per day (bpd) of oil and other liquid exports, OPEC Secretary General Mohammed Barkindo said Monday at a meeting with EU officials. “Given the current demand outlook, it would be nearly impossible to replace a loss in volume of this magnitude.”
Signal against funding increases
The current “volatility” in the market, ie the current price fluctuations, is the result of factors that OPEC does not control. Experts see this formulation as a sign that the cartel will not increase its production. According to Reuters, the EU requested a corresponding examination at the meeting in Vienna.
OPEC+, which includes not only the actual OPEC members but also producing countries such as Russia and Venezuela, decided just over a week ago to increase production quotas moderately by 400,000 barrels a day. OPEC+ will meet again in early May.
Oil prices have fallen significantly again since the outbreak of war
In the past few days, oil prices on the world market have moved away from the multi-year highs that were reached shortly after the start of the war in Ukraine. Today, the price of North Sea Brent oil is even almost 30 percent lower at around $100. A barrel of the US variety WTI is currently trading at around 96 dollars.
The International Energy Agency (IEA) estimated in mid-March that oil shipments from Russia could fall by three million bpd from April. Through April 6, the decline was 0.6 million bpd after an average production of 11 million bpd in March.