Noah Browning and Dmitry Zhdannikov
LONDON (Reuters) – New moves by G7 countries to limit sales of low-priced Russian oil will not be used against OPEC producers, whose plans to cut output have angered consumer nations, a U.S. Treasury official told Reuters.
The United States has contacted representatives of the Organization of the Petroleum Exporting Countries (OPEC) to reassure them of these limits on its plans, the official added.
The comments could help ease a row between the United States and Saudi Arabia, the top oil exporter and de facto leader of OPEC, over what Washington sees as cooperation with Russia to starve supply markets as a global recession looms.
OPEC+, which brings together the producer bloc with allies such as Russia, announced last week that it would cut production by 2 million barrels a day to balance markets and reduce volatility.
Saudi Arabia said the real cut was likely to be about 1 million barrels per day (bpd) as several OPEC members struggled to meet their existing production targets.
The United States said last week that the cuts would boost Russia’s revenue and suggested it was politically motivated by Saudi Arabia, which on Sunday denied backing Moscow in its invasion of Ukraine.
The price cap, which is scheduled for Dec. 5, was designed specifically to combat Russia’s invasion of Ukraine and will not apply to other producers, the official added, as their measures to curb production lead to higher prices.
The new sanctions also do not signal the start of a cartel of buyers to counter the impact of OPEC policies on the oil market, said the official, who declined to be named because of the sensitivity of the situation.
The Paris-based International Energy Agency, which brings together consumer nations including the United States, said last week that the OPEC+ cut had pushed up prices and could push the global economy into recession.
But a U.S. Treasury official dismissed the impact of the price cuts as small, saying it could take a $30-$40 increase in prices, or a production cut 10 times greater than OPEC+’s actual output cut of about 900,000 bpd, to trigger a recession.
The G7 is keen to strip Moscow of wartime revenues but is keen to avoid a global supply shock that could push up prices and hit their own citizens as fears of a global recession deepen.
The price cap plan agreed by the G7 countries in September ran afoul of much tougher European Union bans on Russian supplies ratified in June.
The EU agreed to the cap this month, but the regulatory details have not been ironed out, raising anxiety about the plan in the oil industry with six weeks to go.
(Writing: Noah Browning; Editing: Tomasz Janowski)