Russian oil exports are crucial to global supply, and there are no sources that can compensate for the millions of barrels the country contributes, OPEC’s secretary general has said.
The US is considering whether to ban imports of oil from Russia over its war on Ukraine, and there are fears Russia could redirect its volumes in response to Western sanctions. That has prompted debate as to whether there are alternatives to Russian oil on deck.
“There is no capacity in the world that could replace 7 millions barrels per day,” OPEC chief Mohammed Barkindo told reporters at the Ceraweek conference, according to Reuters.
Barkindo, who has been OPEC’s secretary general since 2016, was speaking at an industry conference in Houston on Monday as oil prices roared toward 14-year highs.
Brent crude was last up to 1.7% at $125.15 a barrel on Tuesday, rising for the third straight day after hitting $139.13 a barrel the previous session. WTI moved up 2.8% Tuesday.
But Barkindo downplayed the impact OPEC could make in the market as the conflict in Ukraine continues, and as Russia and the West trade moves and threats.
“We have no control over current events, geopolitics, and this is dictating the pace of the market,” he said.
So far, OPEC and its allies known as OPEC+ have shown no interest in ramping up production, leading some analysts to say that this is contributing to the squeeze on supply.
Meanwhile, oil buyers and refiners have been “self-sanctioning” staying clear of Russian supplies and looking for alternatives, market analysts have said.
The US is willing to act alone on a ban on Russian oil imports, if its European allies step back, Reuters reported.
But Germany’s leader, Chancellor Olaf Scholz, said Russian energy was “of essential importance” to the daily life of its citizens, as he cautioned against the move.
“Supplying Europe with energy for heat generation, mobility, electricity supply and industry cannot be secured in any other way at the moment,” Scholz said in a statement.
The threat of an import ban prompted Russia’s deputy prime minister to issue a warning and predict oil prices could surge to $300 a barrel.
“It is absolutely clear that a rejection of Russian oil would lead to catastrophic consequences for the global market,” Alexander Novak said on state television Monday.
