OPEC and Russia hold key meeting over oil production

The oil-producing countries of OPEC and their allies like Russia will hold a key meeting on Sunday. There, the countries will presumably decide that they do not want to make any additional production cuts in January. Additional cuts could shore up oil prices, leading to higher prices at the pump.

Reuters news agency recently reported that the alliance, where Saudi Arabia is the dominant party, will likely maintain the current production cut of 2 million barrels (of 159 litres) per day. Further cuts could be discussed, but are not expected to come into effect.

Oil prices have fallen hard recently. This happened mainly due to concerns about strict COVID-19 lockdowns in China, the world's largest oil importer, and weakening oil demand due to the cooling global economy. It is still very uncertain how oil demand will develop in the coming period. That could justify a wait-and-see stance from OPEC+.

It is also still unclear how European sanctions against Russia will affect the oil market. On Friday, EU countries agreed on a price cap for Russian oil transported by sea to Europe. On Monday, the European boycott of Russian oil delivered by sea goes into effect. Taking some of the oil off the world market could push up prices again. How much the European embargo on tanker oil will affect prices is still unclear, according to experts.

(TOM)

^{Secretary General of OPEC Haitham al-Ghais. © AHMAD GHARABLI / AFP}