OPEC+ Output Targets Unchanged Despite Looming EU Ban On Russian Oil

The decision by OPEC+ nations to maintain oil output objectives will help stabilize international markets as a European Union (EU) import ban and a price restriction on Russian crude approach, analysts say.

According to observers, the decision was anticipated as big oil producers evaluate the effects of the various developments.

After OPEC+, which consists of OPEC and its allies, including Russia, decided on Sunday to stick to its October plan to cut oil output by 2 million barrels per day to maintain high prices, oil prices increased by 2% on Monday.

The EU will prohibit the purchase of seaborne crude oil from Russia beginning Monday, in an effort to restrict the country's oil profits following its invasion of Ukraine.

Vandana Hari, founder of Vanda Insights, a global oil and gas markets consultancy, believes the group is "trying to inject at least some degree of predictability and stability in the markets."

This comes just two days after the Group of Seven (G7) nations agreed to a price cap of $60 per barrel for Russian seaborne oil, reducing Moscow's revenue while maintaining Russian oil flowing to global markets.

Given that Russia has been selling the majority of its oil to nations like China and India, the price cap is generally regarded as being ineffective. China and India are not expected to follow Moscow's decision not to provide oil to nations that want to impose a price restriction, according to analysts.

According to Vandana, the price cap is ultimately "being a sort of political maneuver."

 "It's not really going to crash Russian oil revenues as it had intended to do," she said.

Vandana stated that the group's current output targets would be extended "not just for a month or two, but for the next six months."

Its next full meeting is set for June, "which means that the next policy decision that they will be making will be for July of next year", she noted.

The U.S. and other Western countries were incensed by OPEC+'s agreement to reduce output by 2 million barrels per day, or 2% of global demand, from November until the end of 2023. Washington accused the group of siding with Russia despite its conflict with Ukraine.

However, the organization claimed that a poor economic outlook was the reason it had reduced output.

According to Vandana, the world markets have gradually begun to reflect the June measures, including the embargo on Russian oil supplies starting Feb. 5.