At today’s meeting of the OPEC+ (Organization of Petroleum Exporting Countries, with 24 members), they decided to continue the oil production reduction of 2 million barrels a day which has already gone into effect as of November. This, in effect, reiterates the decision made two months ago by OPEC+, for which the consensus is that markets have been relatively stable.There will be a meeting on Feb. 1, 2023 of the OPEC+ monitoring committee of eight member nations to review the situation, and in the meantime, an extraordinary meeting can be called if necessary. The eight monitoring nations for the OPEC+ volume determination are Russia, Saudi Arabia, U.A.E., Iraq, Kuwait, Algeria, Venezuela and Kazakhstan.
On Dec. 5, the EU embargo of any seaborne Russian oil to EU countries goes into effect. In addition, the anti-Russia action of a new price cap on oil will come into force, which has been decreed by the EU, the Group of Seven and Australia. Under their new rule, oil may not be priced higher than $60 a barrel for seaborne Russian oil. Implementation is to come from their pledge that no insurance, financing, and related logistical support from any firms within their nations, will be used in any shipment or transaction that exceeds that dollar amount for Russian seaborne oil.
Today, Russian Deputy Prime Minister Alexander Novak, reporting on this on Rossiya-24, said that Russia will not export its oil under observance of this price cap rule, even if Russia has to cut production, according to TASS coverage. “We will sell oil and oil products to those countries, which will work with us on market conditions, even if we have to somewhat cut production…. We are not going to use instruments linked with the price cap. We are now looking at mechanisms to ban the use of the price cap instrument, regardless of the limit it sets,” he was quoted as saying.
Novak drew out the full implications of the West’s attempt to single out a vital commodity, and ban companies from international transactions. “We think that such interference may entail further destabilization, shortages of energy resources and reduction of investments. It may be applied not only to oil but to other products on the market, and not only to Russia, but to other countries as well.”
