If OPEC+ cuts oil production, Russia stands to benefit from higher prices

A powerful alliance of some of the world’s largest oil producers is considering a major cut in production, which some analysts say could push oil prices back up toward $100 a barrel. The news already sent Brent crude, the global benchmark, up 5% Monday morning.

OPEC and OPEC+ members are set to meet in person Wednesday for the first time since 2020 to decide production goals moving forward. With oil prices falling precipitously since June, delegates told media a cut of more than a million barrels a day is on the table to prop up prices.

Brent crude was trading around $88 a barrel by midday Monday. Excluding this year’s spike which went above $120 per barrel, that price is still higher than at any other time in the last eight years.

“The OPEC ministers are not going to come to Austria for the first time in two years to do nothing,” Pickering Energy Partners’ Dan Pickering told CNBC. “So there’s going to be a cut of some historic kind.”

Any cut by the oil cartel to raise prices is likely going to harm Western countries already facing high energy costs while helping Russia make more money off its oil, the main source funding its war against Ukraine.

While Moscow’s allies mull a production cut that will benefit the country, the European Union is close to a deal on new sanctions for Russia over its war, including a possible price cap on Russian oil sales.

The 13 current OPEC member countries are: Algeria, Angola, Congo, Equatorial Guinea, Gabon, Iran, Iraq, Kuwait, Libya, Nigeria, Saudi Arabia, the United Arab Emirates and Venezuela.

OPEC+ consists of non-OPEC members led by Russia, the group’s largest non-OPEC partner. In addition to Russia, Azerbaijan, Bahrain, Brunei, Kazakhstan, Malaysia, Mexico, Oman, South Sudan and Sudan make up the rest of the group.