OPEC+ to hold virtual meeting

The Organization of Petroleum Exporting Countries and its allies like Russia—known as OPEC Plus (OPEC+)—will meet virtually today.

The meeting comes after the bloc—which accounts for 40% of global crude oil production—cut production by two million barrels-per-day in October. The move angered the US which lobbied unsuccessfully for OPEC+ to increase production to bring down oil prices and hurt Russian oil revenues financing the invasion of Ukraine. The meeting also foreshadows the EU’s price cap due tomorrow.

Effectively a buyers’ cartel, the EU price cap—to be followed by Western allies—aims to severely limit Russian oil exports and the ability of OPEC+ to influence international oil prices because the EU will also enforce an insurance ban on all tankers carrying seaborne Russian oil—affecting most tankers in the world. Therefore, the cap is highly likely to headline today’s meeting. If the cap drives down oil prices, OPEC+ is likely to cut production further to increase prices. Conversely, OPEC+ is unlikely to act should oil prices increase. How the global market will respond is uncertain, but the cap may fail if major Russian oil customers, China and India, don’t sign-on. Thus, expect OPEC+ to take a wait-and-see approach today.