Member countries of the expanded format of the Organization of the Petroleum Exporting Countries (OPEC+) have decided to maintain current production to respond to market uncertainty after the European Union on Friday set a $60 (57 euros) cap on Russian crude.
The outcome of Sunday’s brief meeting, held via videoconference, reflects the unpredictability of supply and demand in the coming months, and the huge swings in prices last week.
«Adhering to the approach of being proactive and preventive, the Participating Countries reiterated their readiness to meet at any time and take immediate additional measures to address market developments and support the oil market balance and its stability if necessary,» according to the final communiqué of the meeting, posted on the organization’s website.
This comes at a time when the European Union sanctions on Russian crude exports are about to come into force next Monday, and the progressive easing of anti-pandemic restrictions in China, which will put an end to the reduction in fuel consumption experienced in recent months.
«Given the massive and offsetting fundamental and geopolitical risks weighing on the oil market, (OPEC+) ministers have understandably chosen to remain firm and entrenched,» said Bob McNally, president of Rapidan Energy Advisers LLC. in comments to Bloomberg.
The decision by the Organization of the Petroleum Exporting Countries and its allies should hold for at least a few months. The group’s Joint Ministerial Monitoring Committee, led by Saudi Arabia and Russia, will meet again in February. The picture could be clearer by then, and the panel has the power to call extraordinary meetings if it believes production policy should change.
It is unclear to what extent these measures will reduce Russian exports. The price cap is comfortably above the $50 at which the country’s flagship Urals crude grade is currently trading, according to Argus Media data.
However, Moscow has said it would rather cut production than sell oil to anyone who adopts the price cap, Russian Deputy Prime Minister Alexander Novak said Sunday in comments reported by Interfax.
«We will sell oil and oil products to those countries that will work with us on market terms, even if we have to cut production a little,» the deputy prime minister said.
