At its latest OPEC and non-OPEC Ministerial Meeting, the OPEC+ group decided to maintain its current production policy amid developments in China and the introduction of a price cap on Russian crude oil.
The group triggered some controversy at its last meeting when it cut production from November to the end of next year by two million barrels per day (bpd), which is equivalent to about 2% of the global demand for crude oil.
Nevertheless, in a press release, OPEC reaffirmed that market considerations had driven the decision, which it said had been shown in retrospect to have been needed to stabilise the oil markets. It also said:
“…the Participating Countries reiterated their readiness to meet at any time and take immediate additional measures to address market developments and support the balance of the oil market and its stability if necessary.”
OPEC+ has put forward the argument that a slowdown in Chinese economic growth, mostly driven by a resurgence in COVID-19 cases and subsequent lockdowns, combined with a weaker economic outlook elsewhere in the world, will impact the world’s demand for oil.
It is currently unclear as to how a $60 per barrel price cap on Russian crude oil, which was agreed by the G7 just days before the OPEC+ meeting, will affect supplies, but it will likely feature in the next OPEC+ meeting in the New Year.