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OPEC sticks to the policy of reducing oil production

origin 1The Organization of the Petroleum Exporting Countries (OPEC) logo is seen outside the OPEC headquarters in Vienna, Austria March 3, 2022. ©Lisa Leutner/Copyright 2022 The AP. All rights reserved

Just hours before new Western sanctions on Russian crude exports take effect, the Organization of the Petroleum Exporting Countries, OPEC, says it is sticking to its current policy of cutting oil production.

The 13 OPEC member countries say they will continue to limit supply by 2 million barrels per day, a policy that began last month and is expected to last until the end of 2023.

The Group often acts to change the supply and demand for oil in order to control market prices and ensure high revenues for its members. But he says he is ready to meet at any time to “address market developments if necessary”.

It is not yet clear how much Russian oil the measures could take away from the global market, which would reduce supply and drive up prices. The world’s second-largest oil producer has been able to redirect most, but not all, of its former European shipments to customers in India, China and Turkey.

The impact of the price cap is also in the air as Russia has threatened to cut off deliveries to countries that meet the cap. But analysts say the country would also likely find ways to circumvent the limit for some shipments.

On the other hand, oil traded lower on fears that coronavirus outbreaks and China’s tough zero-COVID restrictions would reduce fuel demand in one of the world’s major economies. Concerns about recessions in the US and Europe also raise the prospect of lower demand for gasoline and other crude-based fuels.