OPEC Plus countries, including Russia, meet on the eve of EU's ban of Russian oil
AYESHA RASCOE, HOST:
Members of OPEC+ have wrapped up a closely watched meeting today. OPEC+ is the group of oil exporters that includes countries like Oman, Azerbaijan and Russia. And the meeting comes just before new efforts by the West to limit Russia's oil profits in order to deprive Moscow of money it uses to fight in Ukraine, efforts that start tomorrow, when the European Union stops importing Russian oil by ship. And that's most of the oil Russia sells to Europe. NPR international affairs correspondent Jackie Northam has been following the story, and she joins us now.
Good morning, Jackie.
JACKIE NORTHAM, BYLINE: Good morning, Ayesha.
RASCOE: So, Jackie, these countries could have cut production like they did in October despite pleas by the White House. This time, it looks like they've decided not to make any changes. Why is that?
NORTHAM: Well, you know, there's a lot of uncertainty right now in the global oil market. And OPEC+ may just want to see how things play out over the next few weeks and months. And one of those uncertainties is Russia. You know, Russia is one of the world's largest oil producers. And come tomorrow, one of its major customers, the European Union, is saying, we don't want your crude anymore. On top of that, you have the group of seven industrialized nations putting a price cap on Russian crude sold throughout the rest of the world. And that cap is $60 a barrel. So all of a sudden, there could be big shifts in the global oil market. And again, that creates a lot of uncertainty. And OPEC+ has decided to just hold steady and keep production as it is.
RASCOE: So these plans for an EU ban on Russian imports and the price cap that you mentioned, I mean, that's very ambitious. Like, is there a fear among OPEC+ members, which, as we said, includes Russia, that these plans could work?
NORTHAM: Oh, definitely. It's likely the EU ban on oil will work. Europe has been weaning itself off Russian oil for months now and trying to set up new sources. So it doesn't appear that there will be any going back on that ban. The price cap is less certain.
This is a plan that was spearheaded by the U.S. Treasury Department. And I've talked with a lot of analysts over the past few weeks, and there's skepticism. You know, for one thing, countries such as China, India, Turkey, which have been on a buying spree of Russian crude oil at a very low price. None of them have signed on to this price cap deal. You know, there's also issues with enforcement. There's already a lot of illicit selling going on, things like ship-to-ship transfers in the middle of the night and forging documents. And Russian President Vladimir Putin has said he won't sell to any country taking part in the price cap. So all this, you know, could jolt global markets and raise prices.
RASCOE: But oil exports are one of Russia's main revenue sources. So how does the Kremlin plan to make up for that if it won't export to countries adhering to the price cap?
NORTHAM: Well, Russia has been quietly building up what's been described as a ghost fleet of tankers. And, you know, these are old vessels that have been refurbished and put back into service. And China is doing the same thing. So this will help keeps, you know, some of Russia's oil moving, but there aren't nearly enough of these ghost ships to move all of the oil that Russia will need to make up for the shortfall created by the EU ban and the price cap.
RASCOE: So would these moves against Russia make some members of OPEC Plus nervous that in the future the West could do this to other nations, right?
NORTHAM: Well, I would imagine that would be a consideration. You know, a price cap has never been tried before. Usually the cap is on volumes, and that's what we see with Venezuela and Iran. There's probably some concern among OPEC+ members, let's say Saudi Arabia, that the same thing could happen to them. You know, these decisions by OPEC+ are not just about oil. It's also about politics. For example, members like Saudi Arabia and the United Arab Emirates are trying to help prop up the price of oil, which could help Russia and anger the U.S.
RASCOE: In the few seconds we have left, you know, what about other factors OPEC+ might have had on its mind these days beyond the EU and G-7 that they decided to keep production where it is?
NORTHAM: Well, demand for oil is down a bit right now. There's high inflation. Economic growth has slowed. Take a look at China. You know, manufacturing has shrunk there. So has a need for oil. So, you know, all of that was likely taken into consideration by OPEC Plus today.
RASCOE: That's NPR's Jackie Northam. Jackie, thank you so much for joining us.
NORTHAM: Thank you. Transcript provided by NPR, Copyright NPR.