EXCLUSIVE U.S. says Russia oil price cap will not be aimed at OPEC

LONDON, Oct 19 (Reuters) – New moves by the Group of Seven to cap Russian oil sales at an enforced low price will not be repeated against OPEC producers whose plans to curb production have angered consuming countries, a said US Treasury Department official told Reuters.

Washington has been telling officials from the Organization of the Petroleum Exporting Countries (OPEC) to convince them of those limits on its plans, and has claimed from the start that the cap would not target other oil producers, the official added.

The comments could help ease a row between the United States and Saudi Arabia, the world’s largest oil exporter and de facto OPEC leader, over what Washington sees as working with Russia to deprive markets of supply, while a global recession looms.

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Tensions between consumer countries like the United States and oil producers over production policies have been smoldering, with sources telling Reuters that OPEC’s anger over the price cap plan was one of the reasons behind their decision to cut production.

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OPEC+, which groups the producer bloc with allies including Russia, announced last week that it would cut production by 2 million barrels a day in a bid to balance markets and quell volatility.

Saudi Arabia said the actual reduction would likely be around 1 million barrels per day (bpd) as several OPEC members struggled to meet their existing production targets.

The White House said the United States’ analysis showed the cut could have waited until the next OPEC meeting after the US midterm elections in November.

But OPEC officials have not linked the move to Russia’s oil price cap in their talks with the United States, US Deputy Treasury Secretary Wally Adeyemo said last week.

The United States said last week the cut would boost Russia’s revenue and suggested it was carried out for political reasons by Saudi Arabia, which on Sunday denied helping Moscow in its invasion of Ukraine.

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The price cap, due December 5, was specifically designed to counter Russia’s invasion of Ukraine and will not be rolled out to other producers, the official added, as their measures to curb production are driving up prices.

Nor do the new sanctions signal the start of a buyers’ cartel to counter the impact of OPEC’s policies on the oil market, said the official, who declined to be named due to the sensitivity of the situation.

The Paris-based group of consumer countries of the International Energy Agency said last week that the OPEC+ cut has pushed up prices and could push the global economy into recession.

But the U.S. Treasury official saw the price impact of the cut as muted, saying it could require a $30-$40 price hike or a production cut of 10 times the actual OPEC+ production cut of around 900,000 barrels a day, by one trigger recession.

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The G7 is eager to siphon war revenues from Moscow but is trying to avoid a global supply shock that could raise prices and hit their own citizens if fears of a global recession intensify.

The price cap plan agreed by the G7 countries in September faced a conflict with much stricter European Union bans on Russian supplies, which were ratified in June.

The EU agreed on the cap this month, but regulatory details have not been ironed out, adding to concern in the oil industry about the plan with six weeks to go.

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Writing by Noah Browning Editing by Tomasz Janowski and Josie Kao

Our standards: The Thomson Reuters Trust Principles.

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