Russia likely to get suspended by Opec from oil-production deal

Moscow shuts gas supply to Denmark

Some organisation of oil exporting countries (Opec) members are pondering over the idea of suspending Russia in an oil production deal as western sanctions hurt the nation's ability to produce more, the Wall Street Journal reported on Tuesday, citing Opec delegates.

Exempting Russia could pave the way for Saudi Arabia, the United Arab Emirates and other Opec members to produce more to meet the production targets.

Oil prices have soared to above $100 a barrel since the Russian invasion of Ukraine and countries including the US have urged a hike in production to bring prices down.

Russia, one of the world’s three largest oil producers, agreed with Opec and nine non-Opec nations last year to pump more crude each month, but its output is now expected to fall about 8 per cent this year. 

It couldn’t be determined whether Russia would agree to an exemption from the deal’s production targets, the report added. 

By removing Russia from the monthly supply quota system, it could give other Opec members, scope to pump more to stem surging oil prices that topped $120 a barrel this week. It also comes as US President Joe Biden mulls a visit to Riyadh to try and repair frayed diplomatic relations.

No ruble, no gas 

Denmark's largest energy company said Russia cut off its gas supply on Wednesday because it refused to pay in rubles. 

Russia previously halted natural gas supplies to Finland, Poland and Bulgaria for refusing for the same reason. And on Tuesday, the tap was turned off to the Netherlands.

Danish energy company Orsted said it still expected to be able to serve its customers.

“We stand firm in our refusal to pay in rubles, and we've been preparing for this scenario,” Orsted CEO Mads Nipper said.

“The situation underpins the need of the EU becoming independent of Russian gas by accelerating the build-out of renewable energy.”

What could happen now

• Exempting Russia could pave the way for Saudi Arabia, the UAE and other Opec members to produce more to meet production targets
• Oil prices have soared well above $100 a barrel since the Russian invasion of Ukraine and countries have urged a hike in production 
• Russia, one of the world’s 3 largest oil producers, agreed with Opec and 9 other nations last year to pump more crude each month