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OPEC: circumstances that led to an extremely volatile market are beyond our control

Co-chairing the 15th High-Level Meeting of the EU-OPEC Energy Dialogue, Commissioner for Energy, Kadri Simson reiterated the G7 call on oil and gas producing countries to act in a responsible manner and to examine their ability to increase deliveries to international markets, particularly where production is not meeting full capacity, noting that OPEC has a key role to play. 

This is especially important amid the market instability generated by the Russian aggression on Ukraine, after which the EU presented the REPowerEU initiative, which is aimed to end the bloc’s dependency on Russian fossil fuels, boost its security of energy supplies and accelerate its energy system’s decarbonisation.

However, as reported by Euractiv in cooperation with Reuters, OPEC told the EU that current and future sanctions on Russia could create one of the worst ever oil supply shocks.

“We could potentially see the loss of more than 7 million barrels per day (bpd) of Russian oil and other liquids exports, resulting from current and future sanctions or other voluntary actions,” OPEC Secretary General Mohammad Barkindo said, according to a copy of his speech seen by Reuters.

Indeed, as shown in the latest OPEC Monthly Oil Market Report, crude oil spot prices rose for the third consecutive month in March on the back of escalating geopolitical tensions in Eastern Europe and concerns this might result in large oil supply shortages, amid trade dislocations.

Both Commissioner Simson and OPEC Secretary General Barkindo acknowledged the importance of competitive, transparent and stable energy markets and noted the harmful effects market fluctuations and volatility can have on economies.

With regards to market volatility, Mr Barkindo stated that current geopolitical developments in Europe, coupled with the ongoing COVID-19 pandemic, have created an extremely volatile market and that these “non-fundamental factors” are beyond the control of OPEC.

“What we can do is what we have always done – and that is to continue collaborating with our non-OPEC partners in the Declaration of Cooperation to help support market stability and economic growth through our joint decisions”, he stated.

The Secretary General also outlined the need for global leaders to work together through multilateral efforts to achieve both global energy security and world peace, noting that stable energy markets and security of supply are essential for the realisation of the energy transition.

Photo: OPEC/Twitter.

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