Exclusive US says Russian oil price ceiling won’t target OPEC

A US Treasury official told Reuters that new steps taken by the Group of Seven to limit Russian oil sales at an imposed low price would not be repeated against OPEC producers whose plans to cut production angered consuming countries. .

The official added that Washington had contacted representatives of the Organization of the Petroleum Exporting Countries (OPEC) to reassure them of these restrictions on its plans, and confirmed from the outset that the ceiling would not target other oil producers.

The comments may help ease a row between the United States and Saudi Arabia, the largest oil exporter and de facto leader of OPEC, over what Washington sees as cooperation with Russia to deprive markets of supplies as a global recession looms.

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Tensions have risen between consuming countries, such as the United States and oil producers over production policy, with sources telling Reuters that OPEC’s anger over the price cap plan was among the reasons for its decision to cut production.

OPEC +, which brings together the bloc of producers with allies, including Russia, announced last week that it would cut production by two million barrels per day to balance markets and calm volatility.

Saudi Arabia said the real cut would likely be around 1 million bpd, as many OPEC members struggle to meet current production targets.

The White House said US analysis showed that the cut could have waited until the next OPEC meeting after the US midterm elections in November.

But US Deputy Treasury Secretary Wali Adeemo said last week that OPEC officials had not linked the move to Russia’s ceiling on oil prices in their discussions with the United States.

The United States said last week that the cut would boost Russia’s revenue, and suggested Saudi Arabia had engineered it for political reasons, which it denied on Sunday was backing Moscow in its invasion of Ukraine.

The official added that the price cap set on Dec. 5 is specifically designed to tackle the Russian invasion of Ukraine and will not be transferred to other producers, as their moves to curb production are raising prices.

The official, who asked not to be named due to the sensitivity of the situation, said the new sanctions did not signal the beginning of a buyer cartel to counter the impact of OPEC’s policies on the oil market.

The Paris-based International Energy Agency, the group of consuming nations, said last week that the OPEC+ cut pushed prices higher and could push the global economy into recession.

But the US Treasury official saw that the impact of the price cut is silent, saying that it may require a price rise of 30-40 dollars or a production cut 10 times the size of the actual OPEC + production reduction of about 900,000 barrels per day to cause a recession.

The Group of Seven is keen to deprive Moscow of war revenues, but it seeks to avoid a global supply shock that could raise prices and affect its citizens while exacerbating fears of a global recession.

The price cap plan, agreed by G7 nations in September, has run into a stalemate with the EU’s tougher ban on Russian shipments ratified in June.

The European Union agreed to the cap this month but the regulatory details were not settled, raising concern about the plan in the oil industry six weeks ago.

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Written by Noah Browning Editing by Tomasz Janowski and Josie Kao

Our criteria: Thomson Reuters Trust Principles.

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