OPEC+ maintains steady policy amid weakened economy, Russian oil cap

LONDON/DUBAI, Dec 4 (Reuters) – OPEC+ agreed to stick to its oil production targets at a meeting on Sunday as oil markets struggle to assess the impact of a slowing Chinese economy on demand and a G7 price cap on Russian oil on supply.

The decision comes two days after the group of seven (G7) nations agreed on a price ceiling for Russian oil.

OPEC+, made up of the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, angered the US and other Western nations in October when they agreed to cut production by 2 million barrels per day (bpd), about 2% of world demand , from November to the end of 2023.

Washington accused the group and one of its leaders, Saudi Arabia, of siding with Russia despite Moscow’s war in Ukraine.

OPEC+ claimed it had cut production due to a weaker economic outlook. Oil prices have fallen since October due to slower Chinese and global growth and higher interest rates, fueling market speculation that the group could cut output again.

But on Sunday, the group of oil producers decided to keep the policy unchanged. Its key ministers will next meet on February 1 for a monitoring committee, while a full meeting is scheduled for February 3-4. June.

On Friday, G7 countries and Australia agreed to a $60-a-barrel price cap on Russian seaborne crude in a move to deprive President Vladimir Putin of revenue while keeping Russian oil flowing to global markets.

Moscow said it would not sell its oil under the cap and was analyzing how to respond.

Many analysts and OPEC ministers have said the price cap is confusing and likely ineffective as Moscow has sold most of its oil to countries such as China and India, which have refused to condemn the war in Ukraine.

Neither an OPEC meeting on Saturday nor the OPEC+ meeting on Sunday discussed the Russian price cap, sources said.

Russian Deputy Prime Minister Alexander Novak said on Sunday that Russia would rather cut production than deliver oil below the price ceiling, saying the ceiling could affect other producers.

Sources have told Reuters that several OPEC+ members have expressed frustration with the tariff, which says the anti-market measure could eventually be used by the West against any producer.

The US said the measure was not aimed at OPEC.

JP Morgan said on Friday that OPEC+ may review output in the new year based on fresh data on Chinese demand trends and consumer compliance with price caps on Russia’s crude output and tanker flow.

Reporting by Maha el Dahan and Rowena Edwards, editing by Kirsten Donovan

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