OPEC Reportedly Discusses Exempting Russia From Oil Targets—Possibly Setting Stage For Boost In Output

Topline

Members of the Organization of the Petroleum Exporting Countries may exempt Russia from an agreement to gradually boost oil production, the Wall Street Journal reported Tuesday, possibly freeing other oil-producing countries to increase their exports as oil prices remain high and Russia faces restrictions on exports.

An oil pump jack in the countryside of Syria’s northeastern city of Qamishli on October 26, 2019.

AFP via Getty Images

Key Facts

If OPEC suspends Russia from the monthly production goals set by the group in conjunction with other major oil-producing states, members of OPEC—including Saudi Arabia and a dozen other states—may be able to boost their own oil production to make up for Russia, according to the Journal, which cited OPEC delegates.

Petroleum consultant Andrew Lipow told Reuters other oil producers might react to Russia’s suspension by increasing output because “they would feel that they no longer have a production quota agreement that needs to recognize Russia’s interest.”

The Journal reported OPEC isn’t explicitly moving toward a production increase yet, though some OPEC countries are preparing to possibly boost exports this year.

However, Bloomberg reported earlier Tuesday that OPEC+—an alliance of oil producers including Russia—is expected to stick with its existing plan of modestly boosting production targets every month, regardless of Russia’s production issues.

Forbes has reached out to OPEC for comment.

Key Background

After Russia invaded Ukraine in February, oil prices jumped precipitously, amid fears the war could constrict supply by making it harder for Russia—one of the world’s largest petroleum producers—to produce and export oil. Meanwhile, the European Union agreed Monday to ban all Russian oil imports that arrive via ship, and Germany hopes to end all imports of Russian oil into the country this year, moves that could cover 90% of Russia’s oil exports to the EU, according to European Commission President Ursula von der Leyen. The pressure caused by Russia’s invasion added to a months-long trend of rising crude oil prices as demand recovered from the Covid-19 pandemic: The price of West Texas Intermediate has often lingered above $100 per barrel since the war began, up from less than $70 per barrel for part of early December.

Tangent

Since last year, the United States has pushed OPEC and other major oil-producing states to mitigate rising prices by increasing production. The OPEC+ alliance later agreed to gradually raising daily production goals, but has not reacted to the Russian invasion with a major increase.

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Key Background

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