Opec+ is expected to maintain oil output levels in the face of Russian sanctions.

(AFP) – Major oil-producing countries, led by Saudi Arabia and Russia, are expected to maintain current output levels at a meeting on Sunday, ahead of the imposition of further sanctions on Moscow.

The Organization of the Petroleum Exporting Countries (OPEC), which has 13 members, will meet with ten other oil-producing countries, including Russia, to discuss their October resolution to cut output by two million barrels per day. The OPEC+ videoconference will begin at 1100 GMT on Sunday.

On Friday, the EU, G7, and Australia agreed on a $60-per-barrel price ceiling on Russian oil, which will go into force on Monday or soon after, coupled with an EU embargo on Russian crude oil marine supplies.

It would prohibit seaborne supplies of Russian petroleum to the European Union, which account for two-thirds of the bloc’s Russian oil imports, in an effort to deprive Moscow of billions of euros.

While Russia slammed the impending price ceiling on Saturday, threatening to halt exports to any nation that accepted it, Ukraine argued the cap should have been set much lower.

The huge uncertainty in the oil equation for OPEC+ is how severely sanctions will damage Russian production.

“The uncertainty for Russian supplies is enormous,” according to DNB analysts. As a result, OPEC would “seek for a low-key meeting that maintains existing production restrictions.”
A difficult situation

Moscow’s threat to halt supply to price-capped countries would put “some in a very uncomfortable situation,” according to OANDA analyst Craig Erlam: “Choosing between losing access to cheap Russian oil or risking G7 penalties.”

The decision to have a virtual OPEC+ meeting rather than an in-person conference at the Vienna headquarters signalled a policy shift, according to UniCredit analyst Edward Moya. However, “deeper oil output reduction” cannot be ruled out at this time.

The two global crude benchmarks remained near to their lowest levels of the year, far from their March heights, amid economic pessimism fueled by surging inflation and worries about China s reduced energy consumption owing to its Covid-related limitations.

Brent North Sea oil and its US counterpart, WTI, have lost more than 6% of their value since the group’s previous meeting in early October.
However, suspicion that another OPEC+ output reduction was still on the table bolstered prices throughout the week.

“OPEC+ may feel compelled to adopt a more aggressive stance” by cutting or threatening to cut production even further, according to UniCredit analyst Edoardo Campanella.

“Russia may also retaliate by using its influence within OPEC+ to push for additional production cuts in the future, exacerbating the global energy crisis,” he added.