OPEC to maintain oil output

By Yemi Olakitan
The Organization of the Petroleum Exporting Countries will confer with 10 additional oil-producing nations, including Russia, to reconsider its October decision to reduce output by two million barrels per day, according to reports.
On Friday, the European Union, the Group of Seven, and Australia reached an agreement on a $60-per-barrel price cap for Russian crude oil, which will go into effect on Monday or shortly thereafter, along with an EU embargo on marine delivery of Russian crude oil.
In an effort to deprive Moscow’s war chest of billions of euros, it would restrict seaborne supplies of Russian petroleum to the European Union, which account for two-thirds of the bloc’s oil imports from Russia.
While Russia criticized the upcoming price cap on Saturday and threatened to block shipments to any nation that implemented the policy, Ukraine said that the cap should have been set much lower.
The biggest unknown in the oil equation for OPEC is the extent to which Russian supply will be impacted by sanctions.
According to DNB analysts, the level of uncertainty surrounding Russian supply is high. OPEC would consequently “strive for a low-profile meeting in which output quotas remain unaltered.”
Craig Erlam, an analyst at OANDA, stated that Moscow’s threat to withhold delivery to countries adhering to the price restriction would place “some in a very uncomfortable situation” “Choice between losing access to inexpensive Russian crude oil and suffering G7 sanctions.”
Edward Moya, an analyst at UniCredit, opined that the decision to hold a virtual OPEC+ meeting as opposed to a physical conference at the Vienna headquarters indicated a shift in policy.
However, “deeper oil production cuts” cannot be ruled out at this time.
Amid economic gloom fueled by soaring inflation and fears about China’s reduced energy demand as a result of its Covid-related limitations, the two global oil benchmarks stayed close to their lowest levels of the year, well below their March peaks.