The OPEC logo before an informal meeting between members of the Organization of the Petroleum Exporting Countries (OPEC) in Algiers, Algeria September 28, 2016. REUTERS/Ramzi Boudina
BRUSSELS/LONDON, April 11 – OPEC told the European Union on Monday that current and future sanctions against Russia could trigger one of the worst oil supply shocks on record and it would be impossible to replace those volumes, signaling that she wouldn’t pump anymore.
European Union officials held talks with representatives of the Organization of Petroleum Exporting Countries in Vienna amid calls on the group to increase production and as the EU considers possible sanctions on Russian oil.
“We could potentially see the loss of more than 7 million barrels per day (bpd) of Russian oil and other liquid exports resulting from current and future sanctions or other voluntary measures,” OPEC Secretary General Mohammad Barkindo said, according to a copy of seen his speech by Reuters.
“Given the current demand outlook, it would be nearly impossible to replace a volume loss of this magnitude.”
The European Union reiterated at the meeting its call for oil-producing countries to consider increasing supplies to cool rising oil prices, a European Commission official told Reuters.
EU officials also pointed out that OPEC has a responsibility to ensure balanced oil markets, the official said.
OPEC has resisted calls from the United States and the International Energy Agency to pump more crude to slash prices, which hit a 14-year high last month after Washington and Brussels lifted sanctions in the wake of Russia’s invasion of Ukraine imposed by Moscow.
At the meeting with OPEC, the EU said OPEC could allocate more production from its spare capacity, according to an OPEC document seen by Reuters.
Still, Barkindo said the current highly volatile market is the result of “non-fundamental factors” beyond OPEC’s control, a signal that the group will stop pumping.
OPEC+, which consists of OPEC and other producers including Russia, is set to increase production by about 432,000 barrels per day in May as part of a phased unwinding of production cuts made during the worst of the COVID-19 pandemic .
Monday afternoon’s EU-OPEC meeting was the latest in a dialogue begun in 2005 between the two sides.
Russian oil has so far been exempt from EU sanctions. But after the bloc of 27 countries agreed last week to sanction Russian coal — its first targeting energy supplies — some senior EU officials said oil could be next.
The European Commission is drafting proposals for an oil embargo on Russia, the foreign ministers of Ireland, Lithuania and the Netherlands said at an EU foreign ministers meeting in Luxembourg on Monday, despite no agreement on a ban on Russian crude oil. Continue reading
Australia, Canada and the United States, which are less dependent on Russian supplies than Europe, have already banned Russian oil purchases.
EU countries are divided on whether to follow suit, given their greater dependency and the potential that the move could push up Europe’s already high energy prices.
The EU expects its oil consumption to fall by 30% by 2030 from 2015 levels as part of its planned action to tackle climate change – although in the short term an embargo would spark a rush to replace Russian oil with alternative supplies.
Reporting by Kate Abnett; Editing by Mike Harrison and Susan Fenton