The effectiveness of European sanctions on Russian crude and pricing limit measures has not yet produced concrete outcomes, according to Saudi Arabia’s energy minister Prince Abdulaziz bin Salman, and its implementation is still not evident.
In an effort to restrict Moscow’s willingness to fund its conflict in Ukraine, the West established the Council of 7 price ceiling on Russian sea-based oil on December 5.
Russia has declared that it will not follow the rule, even if it means cutting its output.
Prince Abdulaziz stated at a forum held after the country’s 2023 budget revelations that what is currently taking place in terms of punitive measures and price caps placed and all of it really did not bring visible results, which include measures implemented on Dec. 5. There was a straightforward state of uncertainty in implementation.
When analysing the situation in international markets, Prince Abdulaziz stated that it was also important to take into account Russia’s response and the steps it would take in reaction to these tools.
He stated, referring to the price restriction, that these tools were established for political goals, and it is not obvious yet whether they can fulfil these political purposes.
The COVID-19 policies of China are among the additional elements influencing the market in 2023. He added it still “takes time” to see how the relaxation of Covid regulations will affect China’s economy.
The steps taken by central banks to control inflation were still a factor.
Despite the expense of these policies and the potential harm they may do to global economic growth, central banks are nevertheless focused on controlling inflation.
When recent events are taken into account, the OPEC+ alliance’s decision to cut output by 2 million barrels each day on Oct. 5 is the right one, he added.
The Organization of Petroleum Exporting Countries (OPEC) members and allies, including Russia, decided to maintain output at their most recent meeting on December 4 despite a faltering economy and market uncertainty due to the Russian price restriction.
Separately, on Sunday, Saudi Arabia’s foreign minister and Prince Faisal bin Farhan Al Saud said that to encourage producers to build spare output capacity, oil pricing must be reasonable to consumers and suppliers at a policy discussion in Abu Dhabi.
The forum in Riyadh heard from the Saudi energy minister who stated that OPEC+ would continue to prioritise market stability in the coming year.
Prince Abdulaziz added that he stressed that all members of OPEC+ participate in decision-making.
Group action necessitates agreement; hence it is imperative to insist that every OPEC+ member, regardless of how large or small their production is, participate in decision-making. Owing to him, a consensus has advantageous effects on the market.
In addition, following the most recent Russian attack on the region’s electrical system, the Ukrainian port of Odesa was shut down on Sunday, according to Agriculture Minister Mykola Solsky, who added that dealers in grains were not anticipated to halt exports.
According to an agreement between Russia and Ukraine, two additional ports, Chornomorsk and Pivdennyi, were authorised to ship grains from Ukraine and were currently operational in part, he said.
Solsky stated the Chornomorsk port is now working at around 80% of its potential.
Russian drone strikes on two energy plants left more than 1.5 million residents in the southern Odesa area without electricity, according to Ukrainian President Volodymyr Zelensky in a late-Saturday video message.
Because the electricity generators had not yet been turned on, according to Solsky, Odesa port was now not in use. He added that more grain traders are still transporting grain through the other two ports.