WSJ News Exclusive | OPEC plans to suspend Russia from oil production deal


Some OPEC members are exploring the idea of ​​suspending Russia’s participation in an oil production deal as Western sanctions and a partial European ban begin to undermine Moscow’s ability to pump more, officials said. OPEC.

Exempting Russia from its oil production targets could potentially pave the way for Saudi Arabia, the United Arab Emirates and other producers in the Organization of the Petroleum Exporting Countries to pump a lot more crude, which the United States and European countries urged them to do so as the invasion of Ukraine pushed oil prices above $100 a barrel.

Russia, one of the world’s three biggest oil producers, agreed last year with OPEC and nine non-OPEC nations to pump in more crude each month, but its output is now set to fall drastically. about 8% this year. It could not be determined whether Russia would accept an exemption from the production targets of the agreement.

So far, there is no formal pressure for OPEC to pump more oil to make up for any potential shortfall from Russia, but some Persian Gulf members have started planning increased production over the next few months. months, delegates said.

The 13 OPEC members and 10 non-OPEC producers, led by Russia, are due to meet on Thursday, when they are expected to approve a planned increase of 432,000 barrels per day, as part of a series monthly incremental increases designed to bring production back to pre-pandemic levels. . Together, OPEC and non-OPEC producers call themselves OPEC+.

The United States and European countries said the deal was not enough to stabilize an oil market during Russia’s invasion of Ukraine, but OPEC+ refused, sticking to a blessed plan by Moscow.

A Russian Energy Ministry spokeswoman said she would not comment until Thursday’s OPEC+ meeting.

Although Russia is not a member of OPEC, it has coordinated oil production since 2016 with the group in a coalition that controls more than half of global crude production, giving Moscow sway over the oil market. . The pact is called the Statement of Cooperation, or DoC, between the members.

Now OPEC members, including within the core group of the Persian Gulf producers cartel, have begun to debate whether Moscow might have to stop participating in the group’s planned increases, delegates say. . Russia’s output has fallen since President Vladimir Putin launched the invasion of Ukraine and is likely to continue to fall, according to Russia’s own projections.

“We all agreed that Russia is technically out of effective participation in the DoC at this time,” an OPEC delegate said.

European Union leaders took a big step in the economic fight against Moscow following its invasion of Ukraine by agreeing to block 90% of Russian oil imports by the end of the year. The embargo has faced opposition from countries heavily dependent on Russian crude, particularly Hungary. Photo: Olivier Matthys/Associated Press

OPEC delegates said they started talking about an exemption for Russia before the European Union agreed to ban purchases of Russian crude, with few exceptions, and prevent insurers to cover its gross. However, the ban has accelerated talks on how to deal with Russia’s production backlog.

OPEC has waived production requirements in the past for members under duress, including Iraq when it was under sanctions in the 1990s. Libya, Venezuela and Iran all currently enjoy exemptions of any obligation to meet OPEC objectives.

Russia missed its production target, called a quota within OPEC, for several months.

“It doesn’t make sense to force them to meet a quota,” an OPEC delegate said.

Whatever OPEC does, it is likely to try to keep Moscow as an ally, waiting for a day when its production can return. Even with reduced production, Russia pumps more than all countries except the United States and Saudi Arabia.

“Russia brings us considerable power as a pressure group,” said an OPEC official from the Persian Gulf.

Still, some members worry that exempting Russia from its targets could undermine the cohesion of OPEC+. Russia would retain its grip on the group without having to participate in increasing or reducing production.

Without Russia, “what is the concept of OPEC+,” said an OPEC delegate.

If the group decides it needs to cut production in the future – a decision that is always difficult because it forces members to give up income – Russia would have an easier time saying no.

“The danger of allowing Russia to be quota-free is that when we are forced to cut in the future, Russia will resist,” the Persian Gulf OPEC official said.

In recent weeks, Moscow’s representatives at internal OPEC+ meetings on the technical side of the oil market have pressed the group to revise down its forecast for oil demand amid rising prices, delegates said. of OPEC. If OPEC sees demand weakening, it will be more difficult for the group to increase production, the delegates said.

Write to Benoit Faucon at benoit.faucon@wsj.com and Summer Said at summer.said@wsj.com

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