Opec extends oil cut as sanctions hit Russia

THE Opec cartel has warned it could take immediate action to adjust output as the group of oil-producing nations braces for the fallout of fresh Western sanctions on Russia.

Opec, which comprises 23 nations including Saudi Arabia, said it was maintaining its policy of reducing production by two million barrels per day which came into force last month and will run to the end of next year.

However, it said it was ready to “meet at any time” and could “take immediate additional measures”. It comes as oil markets prepare for renewed volatility, with a fresh price cap set to come into force on Russian oil today.

The EU, G7 nations and Australia have all agreed to set a cap of $60 a barrel – Brent Crude was $89 on Friday – in an attempt to stop Moscow from profiteering from oil exports in the wake of Vladimir Putin’s Ukraine invasion. The cap, which was agreed last week, coincides with an EU ban on seaborne crude imports from Russia.

Bill Farren-price, head of macro oil and gas research at Enverus, said: “Faced with a raft of uncertainties on Russian sanctions and the price cap, Opec has held back for now. But the threat of further cuts is real. The group is in supply management mode.”

Alexander Novak, Russia’s deputy prime minister, said yesterday that it would not sell Russian oil under a price cap and warned that the move would destabilise global energy markets by triggering a shortage of supply.

He said: “We will sell oil and petroleum products only to those countries that will work with us under market conditions, even if we have to reduce production a little.”

Russia is one of the world’s largest oil producers, behind Saudi Arabia.