On Wednesday, October 5, the countries participating in the OPEC+ agreement approved new parameters for oil production.

As a result of negotiations in Vienna, the representatives of the states decided from November 2022 to reduce production by a total of 2 million barrels per day from the level of August.

As Deputy Prime Minister of Russia Alexander Novak said after the meeting, the planned reduction in oil production will be the largest in the last two years.

The initiative is designed to restore the balance between supply and demand in the global energy market during a period of uncertainty, the deputy prime minister explained.

According to him, in autumn and winter, fuel consumption in the world traditionally decreases, so the volume of production of raw materials also needs to be adjusted.

In addition, global economic growth has begun to slow down, putting additional pressure on oil demand.

“There are signs of a recession that many economists are talking about today, and this is being discussed in many countries, including in the United States, in the European Union.

We see a slowdown in economic growth in the People's Republic of China, so these risks were also taken into account, ”Novak said on the air of the Russia 24 channel.

  • Deputy Prime Minister of the Russian Federation Alexander Novak

  • RIA News

  • © Murad Orudzhev

World oil prices reacted with growth to the decision of the OPEC+ countries.

In the afternoon, the cost of raw materials of the benchmark Brent brand on the ICE exchange in London rose by 2.3% to $93.94 per barrel.

While the alliance's actual oil output has lagged far behind its targets lately, the current OPEC+ decision could lead to further increases in commodity prices.

Alexander Potavin, an analyst at FG Finam, shared this opinion with RT.

According to him, the cost of a barrel of Brent in the near future may again rise above the psychological level of $100.

American disaster

The outcome of the negotiations between the OPEC + countries caused discontent in the United States.

According to the White House, Joe Biden was disappointed by the "myopic" decision of the alliance to reduce oil production.

At the same time, on the eve of the OPEC + meeting, the US authorities tried to dissuade the meeting participants from cutting production.

Representatives of Biden conducted relevant negotiations with representatives of Kuwait, Saudi Arabia and the United Arab Emirates, CNN reported, citing sources in the US government.

According to him, the prospect of reducing oil production by OPEC + countries is considered by the US leadership as a "total catastrophe."

The actions of the alliance may lead to an increase in oil prices on the world market and, as a result, an increase in the cost of gasoline in the United States.

This, in turn, will come at a "dangerous moment for the Biden administration," as the midterm congressional elections are only five weeks away, the article says.

This is not the first time the White House has tried to influence OPEC+ decisions.

For example, in June, Washington actively urged members of the organization to increase oil production to reduce world fuel prices.

However, according to the Financial Times, Saudi Arabia does not intend to make concessions to the United States and, on the contrary, seeks to raise the cost of oil in order to "anger the United States and help Russia."

As Stanislav Mitrakhovich, an expert from the National Energy Security Fund, told RT, Riyadh and other major oil producers from the Middle East are not profitable today due to lower commodity prices.

At the same time, the political aspect in this matter also plays an important role, the specialist is sure.

“The fact is that the sanctions against Russia made an impression on the Middle East and caused a wave of fears in the region.

After all, the West at any moment can remember that the Arab countries are not “democratic”, and will also begin to impose restrictions against them, including the seizure of assets.

Thus, today's decision is a clear signal to the market and Washington that Saudi Arabia and the UAE are pursuing their own policy and will not follow the lead of the United States.

For Russia, this is rather positive, ”the expert explained.

  • US President Joe Biden

  • AP

  • © Susan Walsh

Against the background of the OPEC + decision, Joe Biden ordered the release of an additional 10 million barrels of oil from the US strategic reserves to the market in November.

It should be noted that for half a year Washington has been using these reserves to cover the shortage of raw materials in the US domestic market.

At the same time, the volume of the country's strategic reserves has already decreased to the lowest level in the last 38 years, as evidenced by the data of the US Department of Energy.

Price chaos

One of the threats to the world oil market, Alexander Novak also called the attempts of Western countries to set a price ceiling for Russian raw materials.

According to the Deputy Prime Minister, such actions violate all market mechanisms and can lead to underinvestment in the oil industry, an even greater decrease in production and, as a result, a serious rise in fuel prices on the global market.

“Today, unfortunately, politics prevails over the economy, and such inefficient decisions lead to the fact that there will simply be a rise in prices and consumers in these countries will pay for it,” Novak emphasized.

On the afternoon of October 5, the Permanent Representative of Lithuania to the EU, Arnoldas Pranckevicius, announced that the EU had agreed on the eighth package of sanctions against Moscow.

The restrictions, in particular, provide for the establishment of marginal prices for Russian oil, the diplomat wrote on Twitter.

  • Gettyimages.ru

  • © Daniel Acker/Bloomberg

Recall that in March 2022, the United States announced a ban on the import of energy resources from Russia and, starting from May, completely stopped buying raw materials from Moscow.

Following the United States, Great Britain announced plans to abandon Russian oil, and later a similar initiative was announced in the EU.

At the same time, the European embargo should be fully operational only from December 5 and will apply only to sea supplies, and not to pipeline ones.

Nevertheless, oil exports from Russia to Europe have already declined markedly in recent months.

According to the International Energy Agency (IEA), from January to August 2022, the supply of Russian raw materials to the EU countries and the UK fell by more than 34% - from 2.6 million to 1.7 million barrels per day.

Moscow, meanwhile, continued to receive a high volume of income from the sale of oil due to increased prices for raw materials and the reorientation of supplies to Asian countries.

According to the calculations of the Ministry of Finance of the Russian Federation, from January to September 2022, Russia earned 7.57 trillion rubles from the export of oil and petroleum products, which is 49% more than in the same period of 2021.

Against this backdrop, in the summer, the United States, together with European countries and other G7 partners, thought about limiting the cost of Russian oil.

For this, in particular, it was proposed to ban insurance and financing of ships that are engaged in the transportation of raw materials from the Russian Federation at a price above a certain limit.

As noted in the official statement of the G7, such measures will reduce Moscow's profit from energy exports.

However, such attempts to interfere in market mechanisms have no prospects, as President Vladimir Putin announced in early September.

According to him, Moscow is not going to trade according to the rules imposed on it and sell raw materials at a loss.

“Absolutely stupid decision.

If someone tries to implement it, it will not lead to anything good for those who make this decision... We will not supply anything if it is contrary to our interests, in this case, economic ones.

We will not supply gas, nor oil, nor coal, nor fuel oil - we will not supply anything ... Those who impose something on us are not in the position today to dictate their will to us.

Let them come to their senses,” Putin warned.

  • Russian President Vladimir Putin

  • RIA News

  • © Alexey Danichev

Analysts interviewed by RT also doubt the success of the G7 initiative.

Nikolai Vavilov, a specialist in the strategic research department at Total Research, believes that if Europe prohibits its insurance and transport companies from transporting Russian oil at a price above a certain level, Moscow will be able to use the services of organizations from friendly states or create its own insurer.

“There will always be those who want to make money selling Russian oil.

Moreover, without our market share, prices will fly into space, ”the analyst believes.

Moreover, according to him, not all countries of the world today are ready to support the plans of the West to limit the cost of Russian oil.

Against this background, the income of the Russian Federation from the sale of fuel will not be seriously affected, the specialist is sure.

“The countries of Asia and the Middle East will not enter into a coalition with the West and will continue to cooperate with Russia.

Losses in exports will be offset by high oil prices, which are formed when the market does not receive several million barrels per day of our oil.

Of course, we will not sell oil to countries that will support the price ceiling,” Vavilov concluded.