Russia Proposed Oil Exports Threaten OPEC’s Output Freeze Deal

Russia’s plan to export more crude oil to Europe in April than it had exported in any month since 2013 is threatening a global agreement between the Organization of Petroleum Exporting Countries, OPEC, and non-OPEC members on freezing production in a bid to lift the price of crude oil.

Reuters has reported that this development shows how hard it would be to enforce the forthcoming agreement that is due to be finalized on April 17 in Qatar.

It also shows the potential for countries to use loopholes to keep exporting crude, and erode the intended impact on prices.

This is coming as the price of Brent crude oil dipped by 2.3 per cent on Thursday and West Texas Intermediate, the US benchmark price for crude oil, lost by 2.7 per cent.

Crude oil prices are down nearly five per cent from Monday for one of their worst weeks of the year.

Moscow said the agreement on freeze between OPEC and non-OPEC covered only production and not sales abroad, hence the country can raise exports while keeping production flat by re-routing some crude oil away from refineries and into exports.

The International Energy Agency (IEA) said on Wednesday that the deal may be meaningless, while Iran and Libya have said they will not participate, at least for now, and they also plan to raise production.