Some OPEC members are exploring the idea of suspending Russia’s participation in the oil production deal as Western sanctions and partial european ban OPEC delegates said it was starting to undermine Moscow’s ability to pump more.
Russia’s exemption from oil production targets may clear the way for Saudi Arabia, the United Arab Emirates and other producers in the Organization of the Petroleum Exporting Countries (OPEC) to pump significantly more crude, something the United States and European countries have lobbied for. As the invasion of Ukraine drove up oil prices Over $100 a barrel.
Russia, one of the world’s three largest oil producers, agreed with OPEC and nine non-OPEC countries last year to pump more crude every month, but its production It is now expected to fall About 8% this year. It cannot be determined whether Russia will agree to an exemption from the deal’s production targets.
So far, there is no official reason for OPEC to pump more oil to make up for any oil Possible Russian shortagebut some members in the Persian Gulf have begun planning to ramp up production sometime in the next few months, delegates said.
The 13 OPEC members and 10 non-OPEC producers led by Russia are due to meet on Thursday, where they are expected to agree to a planned increase of 432,000 barrels per day – part of a series of additional monthly increases designed to return production to pre-pandemic levels. . Together, producers in OPEC and non-members call themselves OPEC+.
The United States and European countries said that the deal is not enough to stabilize the oil market during Russia’s invasion of Ukrainebut OPEC + refused, stuck to the plan Moscow blessed her.
A spokeswoman for Russia’s Energy Ministry said it would not comment until Thursday’s OPEC+ meeting.
While Russia is not a member of OPEC, it has coordinated oil production since 2016 with the group in an alliance that controls more than half of the world’s crude oil production, giving Moscow leverage over the oil market. The agreement is called a Declaration of Cooperation, or DoC, between members.
Now, OPEC members, including within the core group of producers in the Persian Gulf, are beginning to discuss whether Moscow should stop participating in the group’s planned increases, delegates say. Russia’s production has fallen since the president
Russian President Vladimir Putin
launched an invasion of Ukraine, and is likely to retreat further, according to Russia’s own projections.
“We all agreed that Russia is technically out of active participation in the State Department at the moment,” an OPEC delegate said.
OPEC delegates said they started talking about an exemption for Russia before The European Union agreed to ban purchases of Russian crude, with some exceptions, prevent insurance companies from covering their ore. However, the ban has accelerated talk of dealing with Russia’s sluggish production.
OPEC has in the past waived production requirements for members vulnerable to coercion, including Iraq when it was under sanctions in the 1990s. Libya, Venezuela, and Iran currently have exceptions to any obligation to meet OPEC’s goals.
Russia has missed its production target, called a quota within OPEC, for several months.
“It doesn’t make sense to make them stick to quotas,” said one of the OPEC delegates.
Whatever OPEC does, it will likely try to keep Moscow as an ally, and look to the day when its production can return. Even with lower production, Russia pumps more than all countries except the United States and Saudi Arabia.
“Russia brings us great strength as a pressure group,” said an official at the Organization of the Petroleum Exporting Countries (OPEC) in the Gulf.
However, some members are concerned that excluding Russia from its targets will undermine the cohesion of OPEC+. Russia will maintain its influence in the group without having to participate in increasing or decreasing production.
“What is the concept of OPEC+?” said one of the OPEC delegates without Russia.
If the group decides it must cut production in the future — a decision that is always difficult because it requires members to forgo revenue — it will be easier for Russia to say no.
“The danger of allowing Russia to be free of quotas is that when, in the future, we are forced to cut, Russia will resist,” said the OPEC official in the Persian Gulf.
OPEC delegates said that in recent weeks, Moscow representatives in internal OPEC + meetings on the technical side of the oil market have pressed the organization to revise its expectations for a decline in oil demand amid rising prices. Delegates said that if OPEC sees demand faltering, it will be difficult for the organization to increase production.
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