Richard Ginika Izuora
Saudi Arabian Energy Minister, Prince Abdulaziz bin Salman on Sunday said the impact of European Union’s sanctions on Russian crude oil and price cap measures “did not bring clear results yet” and its implementation was still unclear.
The G-7 cap on the price of Russian seaborne oil of $60 per barrel came into effect Dec. 5 as the West seeks to limit Moscow’s ability to finance its war in the Ukraine.
Russia has said it would not respect the EU’s measure even if it has to cut its production.
“What is happening now in terms of sanctions and price caps imposed and all of it really did not bring clear results, including measures implemented on Dec. 5, we see a state of uncertainty in implementation,” Prince Abdulaziz told a forum held following the country’s 2023 budget announcements in Riyadh.
According to Prince Abdulaziz, Russia’s reaction to the sanction and what actions it would take was another aspect that needed to be taken into consideration when looking at the state of play in global markets.
“These tools were created for political purposes and it is not clear yet whether they can achieve these political purposes,” he said, referring to the price cap.
Other factors affecting the market going into 2023 include China’s COVID-19 policies. The impact on China’s economy from easing Covid restrictions still “needs time”, he said.
“Central banks are still preoccupied with managing inflation, no matter the cost of these measures and their possible negative impact on global economic growth.”
The minister said the OPEC+ alliance decision to cut production by 2 million barrels per day on Oct. 5 was proven to be the correct one when recent developments are taken into consideration.
The alliance, which groups together members of The Organization of Petroleum Exporting Countries and allies including Russia, last met on Dec. 4 and decided to keep output unchanged amid a weakening economy and uncertainty over how the Russian price cap would affect the market.
Prince Abdulaziz said the alliance would continue to focus on market stability in the year ahead.
He also said he insisted that every OPEC+ alliance member take part in decision-making.
“Group action requires agreement and therefore I continue to insist that every OPEC+ member, whether a big or small producer…be a part of decision-making,” Prince Abdulaziz told the forum.
“Consensus has positive implications on the market.”