(Original title: OPEC+ decides to keep oil production unchanged when Russian oil sanctions and Russian oil price limit are about to be implemented)
Zhitong Finance APP learned that on December 4 local time, OPEC+ held an online meeting and decided to maintain production at the current level. At the last ministerial meeting, the organization decided to cut production sharply, planning to reduce total crude oil production by 2 million barrels per day. OPEC+’s maintenance of output unchanged this time was driven by the EU’s Russian oil sanctions and the Russian oil price ceiling, and it was also related to China’s adjustment of anti-epidemic measures.
Brent oil hit its lowest since September on Nov. 28 before recovering. As of press time, Brent oil rose 1.38% to $86.75.
(Source: Yingwei Finance)
It is reported that the next meeting of OPEC+ will be held on June 4 next year, but depending on the situation, the meeting may be held earlier. The Joint Ministerial Monitoring Committee (JMMC), which oversees implementation of the cuts, will meet again on Feb. 1, delegates said.
The oil market could look very different in early 2023, with perhaps some historic shifts in supply and demand in the coming days and weeks. In order to vigorously develop the economy, China’s demand for oil may increase.
On Monday, the European Union will ban imports of most seaborne Russian oil and prevent any other buyers from using the region’s shipping or insurance services to buy Russian oil unless it falls below a price cap of $60 a barrel.
It is unclear to what extent these measures will restrict Russian oil exports. That price ceiling is higher than the current $50 for Russia’s flagship Urals crude, according to Argus Media. The country said it would rather cut production than sell oil to any buyer who applied a price cap.
With these powerful forces likely to push the oil market in unpredictable directions, OPEC watchers say the group’s decision is understandable.
Amrita Sen, chief oil analyst and co-founder of consultancy Energy Aspects, said OPEC+ decided to keep output unchanged due to uncertainty about factors such as the Russian oil price cap. The organization will continue to monitor market dynamics and if fundamentals deteriorate, the next ministerial meeting will be brought forward as early as June next year.
After OPEC+ announced its decision on Sunday, the global reaction was calmer than at the October meeting, and the United States has yet to comment on it.
Regarding the decision to cut production in October, OPEC+ pointed out that it was purely out of market considerations, and market participants also recognized that this was a necessary and correct course of action to stabilize the global oil market.