OPEC+ to Discuss Output on Sunday Ahead of Embargo

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OPEC logo is pictured ahead of an informal meeting between members of the Organization of the Petroleum Exporting Countries (OPEC) in Algiers, Algeria September 28, 2016. REUTERS/Ramzi Boudina/File Photo
OPEC logo is pictured ahead of an informal meeting between members of the Organization of the Petroleum Exporting Countries (OPEC) in Algiers, Algeria September 28, 2016. REUTERS/Ramzi Boudina/File Photo

OPEC+ will hold a series of meetings on Sunday to discuss the situation in the oil market and the possibility of adjusting its oil agreement against the backdrop of the EU’s price cap on Russian oil and G7’s price ceiling on oil from Russia.

On Friday, the European Union reached an agreement on setting a price cap on Russian oil at $60 per barrel. The agreement reportedly provides for a review mechanism to keep the price cap at 5% below the market value. The G7 nations and Australia also agreed to set a $60 price ceiling on oil from Russia, which will enter into effect on December 5.

Members of the OPEC+ ministerial monitoring committee will hold the first session to give recommendations on the adjustments to the agreement based on market analysis. The virtual meeting is scheduled to start at 11:00 GMT. The heads of all OPEC+ delegations will meet via videolink and make the final decision at 12:00 GMT.

The decision to hold meetings of OPEC+ in December via videolink is reportedly due to the fact that the organization does not plan to make adjustments to its oil agreement.

In May 2020, OPEC+ reduced crude production by 9.7 million barrels per day due to a drop in oil demand caused by the COVID-19 pandemic. In October, OPEC+ unanimously agreed to take 2 million barrels of oil per day off the market, starting in November, in response to uncertainty in global energy markets.

In response to Russia’s military operation in Ukraine, the European Union announced a ban on the provision of services and insurance for Russian oil supplies around the world, as well as a partial embargo on Russian oil. The restrictions are due to come into force in December this year for seaborne imports of Russian crude and in 2023 for petroleum products.

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