U.S. Assures OPEC That G7 Price Cap On Russian Oil Won’t Target Them
The US has assured OPEC members that the G7 group’s price-capping measures against Russia is meant only to restrict Russia’s oil revenues, and was not targeted at OPEC members.
A US Treasury official told Reuters on Wednesday, that notwithstanding, the gesture may do little to tamp down the animosity between the United States and OPEC.
The United States made its position known to OPEC yesterday to reassure them that any price-capping action wouldn’t be replicated in response to OPEC’s production cuts.
Tensions have grown between the US States and OPEC, particularly Saudi Arabia, since the last OPEC+ meeting in Vienna, where the group decided to cut production targets by 2 million bpd from November.
Before the meeting, the US, led by its President, Joe Biden had embarked a global, lobbying intensely to delay any production cuts.
Saudi Arabia said that the actual OPEC+ production cuts for November would come in somewhere near 1 million bpd, with some members already under-producing the new target. The US has claimed that the production cut would further line Russia’s pockets with oil money by driving the price of oil upward.
Although prices did rally following the OPEC+ meeting, they have since come back down. But tensions between Saudi Arabia and the United States have not. The latter is insisting that relations between the two countries will be reviewed
The G7 agreed to a price cap in September, with the EU agreeing in October. The details of a price cap still need to be hashed out, and the G7 invited all countries to provide input on the design of the price cap, looking to have “a broad coalition in order to maximise effectiveness.
The G7 is also “urging all countries that still seek to import Russian oil and petroleum products to commit to doing so only at prices at or below the price cap.”
Bloomberg has said that White House officials were concerned that a price cap on Russian crude oil could lead to a rise in crude oil prices after the OPEC+ decision, which increased oil market volatility.