OPEC Weighs Suspending Russia From Oil-Production Deal
Some OPEC members are exploring the idea of suspending Russia’s participation in an oil-production deal as Western sanctions and a partial European ban begin to undercut Moscow’s ability to pump more, OPEC delegates said.
Exempting Russia from its oil-production targets could potentially pave the way for Saudi Arabia, the United Arab Emirates and other producers in the Organization of the Petroleum Exporting Countries to pump significantly more crude, something that the U.S. and European nations have pressed them to do as the invasion of Ukraine sent oil prices soaring above $100 a barrel.
Russia, one of the world’s three largest oil producers, agreed with OPEC and nine non-OPEC nations last year to pump more incrementally more crude each month, but its output is now expected to fall by about 8% this year. It couldn’t be determined whether Russia would agree to an exemption from the deal’s production targets.
So far, there is no formal push for OPEC to pump more oil to make up for any potential Russian shortfall, but some members in the Persian Gulf have begun planning for an output increase sometime in the next few months, delegates said.
OPEC’s 13 members and 10 non-OPEC producers led by Russia are set to meet on Thursday, when they are expected to approve a planned increase of 432,000 barrels a day—part of a series of incremental monthly increases designed to bring production back to prepandemic levels. Together, the OPEC and non-OPEC producers call themselves OPEC+.
The U.S. and European nations have said the deal isn’t enough to stabilize an oil market during the Ukraine invasion, but OPEC+ has refused, sticking with a plan blessed by Moscow.
A spokeswoman for Russia’s energy ministry said she wouldn’t comment until the OPEC+ meeting on Thursday.
While Russia isn’t a member of OPEC, it has coordinated oil production since 2016 with the group in a coalition that controls more than half of the world’s crude output, giving Moscow sway over the oil market. The pact is called the Declaration of Cooperation, or DoC, among members.
Now, OPEC members, including within the cartel’s core group of Persian Gulf producers, have started to debate whether Moscow might have to stop participating in the group’s planned increases, delegates say. Russia’s production has fallen since President
Vladimir Putin
launched an invasion of Ukraine and will likely drop further, according to Russia’s own projections.
“We all agreed that Russia is technically out of the effective participation in the DoC at the moment,” said an OPEC delegate.
Write to Benoit Faucon at [email protected] and Summer Said at [email protected]
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
Some OPEC members are exploring the idea of suspending Russia’s participation in an oil-production deal as Western sanctions and a partial European ban begin to undercut Moscow’s ability to pump more, OPEC delegates said.
Exempting Russia from its oil-production targets could potentially pave the way for Saudi Arabia, the United Arab Emirates and other producers in the Organization of the Petroleum Exporting Countries to pump significantly more crude, something that the U.S. and European nations have pressed them to do as the invasion of Ukraine sent oil prices soaring above $100 a barrel.
Russia, one of the world’s three largest oil producers, agreed with OPEC and nine non-OPEC nations last year to pump more incrementally more crude each month, but its output is now expected to fall by about 8% this year. It couldn’t be determined whether Russia would agree to an exemption from the deal’s production targets.
So far, there is no formal push for OPEC to pump more oil to make up for any potential Russian shortfall, but some members in the Persian Gulf have begun planning for an output increase sometime in the next few months, delegates said.
OPEC’s 13 members and 10 non-OPEC producers led by Russia are set to meet on Thursday, when they are expected to approve a planned increase of 432,000 barrels a day—part of a series of incremental monthly increases designed to bring production back to prepandemic levels. Together, the OPEC and non-OPEC producers call themselves OPEC+.
The U.S. and European nations have said the deal isn’t enough to stabilize an oil market during the Ukraine invasion, but OPEC+ has refused, sticking with a plan blessed by Moscow.
A spokeswoman for Russia’s energy ministry said she wouldn’t comment until the OPEC+ meeting on Thursday.
While Russia isn’t a member of OPEC, it has coordinated oil production since 2016 with the group in a coalition that controls more than half of the world’s crude output, giving Moscow sway over the oil market. The pact is called the Declaration of Cooperation, or DoC, among members.
Now, OPEC members, including within the cartel’s core group of Persian Gulf producers, have started to debate whether Moscow might have to stop participating in the group’s planned increases, delegates say. Russia’s production has fallen since President
Vladimir Putin
launched an invasion of Ukraine and will likely drop further, according to Russia’s own projections.
“We all agreed that Russia is technically out of the effective participation in the DoC at the moment,” said an OPEC delegate.
Write to Benoit Faucon at [email protected] and Summer Said at [email protected]
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
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