US tells OPEC Russian oil price cap won’t target cartel: report

  • The United States has reassured OPEC that a cap on Russian oil prices is not also aimed at the cartel, a Treasury official told Reuters.
  • The official also said the proposed cap for Russian oil was not the start of a buying cartel designed to counter OPEC.
  • The assurances could help ease the increasingly strained relationship between the United States and Saudi Arabia.

The United States told OPEC that a proposed cap on Russian oil prices would not be reused later to also target the cartel, a A Treasury official told Reuters.

The official also said the price cap plan was not the start of a buying cartel designed to counter OPEC’s influence in oil markets.

U.S. assurances could help ease increasingly strained relations between the United States and de facto OPEC leaders Saudi Arabia.

Earlier this month, OPEC and non-member allies like Russia cut its oil production quota by 2 million barrels a day despite calls from Washington to increase production.

The White House has accused the so-called OPEC+ coalition of siding with Russia, and President Joe Biden has warned Saudi Arabia will suffer the consequences.

U.S. officials said the OPEC+ cut was a retaliation for efforts to cap Russian oil prices. OPEC members said the quota cut was not a political decision. Saudi Arabia also said the actual supply cut would be closer to 1 million bpd as some OPEC members pumped below their quotas.

The price cap is meant to coincide with the EU embargo on Russian oil imports by sea which will come into effect on December 5. The idea is to avoid a supply shock that will drive up oil prices by creating a loophole in the EU embargo to keep Russian crude on world markets while limiting Moscow’s revenue.

The G7 and the EU have endorsed it, but key details remain, while Russia’s major oil customers like China and India have not signed on.

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