OPEC and Russia to Meet as Global Forces Weigh on Oil Market

Europe is facing a truly gargantuan task. First, it must replace a major source of crude oil when the Russian embargo starts on Monday; then, in February, the embargo expands to cover Russia’s refined products, like diesel. Much of the switchover is already happening, with tankers bringing oil to Europe from the United States, Brazil, Guyana and the Middle East.

For this reason, analysts say, Europe may escape major problems — at least in the early days. “There might be a bit of disruption in the first few days,” said Josh Folds, an analyst at FGE, a consulting firm. He said the plan to phase out Russian refined products in February might create greater problems, especially for diesel, which Europe has been importing from Russia in vast quantities.

Oil markets, too, have been calm, staying at just under the $90 a barrel for Brent crude, the international benchmark, a price level, analysts say, that the Saudis want to defend.

But much could also go wrong. The world’s oil trade is being rerouted, often with much longer journeys, straining the shipping fleet to near breaking point. And while it is widely assumed that President Vladimir V. Putin of Russia will allow operations to continue as usual while the embargo and the price cap kick in, some analysts worry that he could start to withhold or obstruct oil, using the fuel as a weapon in the war in Ukraine just as he has by cutting natural gas deliveries to Europe.

“We have seen increasingly that Russia has done things which are driven by politics rather than economics when it comes to energy exports,” Mr. Bronze said.

Article source: https://www.nytimes.com/2022/12/02/business/opec-oil-embargo-price-cap.html