Energy analysts predicted that OPEC and non-OPEC oil producers might decrease their output even more on Sunday as the key energy alliance considers the effects of a potential ban on Russian crude exports and a potential price ceiling on Russian oil.
On Sunday, OPEC+, a group of 23 oil-producing countries led by Saudi Arabia and Russia, will meet to determine the next step in production policy.
Ahead of disruptive sanctions on Russian oil, declining crude demand in China, and growing recessionary concerns, the expected summit will take place.
From OPEC’s headquarters in Vienna, Austria, Claudio Galimberti, senior vice president of analysis at energy consultancy Rystad, told CNBC that he thinks the organization “would be better off to stay the course” and continue with its current production strategy.
“OPEC+ has been rumored to consider a cut on the basis of demand weakness, specifically in China, over the past few days. Yet, China’s traffic nationwide is not down dramatically,” Galimberti said.
The idea of a G-7 price ceiling on Russian oil adds to the anxiety among participants in the energy market after the European Union imposed sanctions on the buying of the Kremlin’s seaborne crude exports on December 5.
In a coordinated effort to reduce the Kremlin’s war fund in the wake of Moscow’s invasion of Ukraine, the 27-nation EU bloc decided in June to forbid the purchase of Russian seaborne oil beginning on December 5.
The G-7, however, is considering a price cap on the amount it will pay for Russian oil out of concern that an outright ban on Russian crude imports could drive up oil prices.
Although Reuters reported on Thursday that EU nations had made a provisional agreement to a $60 per barrel price restriction on Russian seaborne oil, no formal agreement has yet been made.
The price cap will be another aspect that OPEC must take into account, according to Galimberti. “It’s still uncertain, and this only makes things more so.”
The Kremlin has previously issued warnings that attempts to set a price cap on Russian oil will have more negative effects than positive ones.
