The Russia-Ukraine War, which started on February 24, 2022, not only affected the relations between the two countries; it has brought with it the energy crisis that deeply shook the global system and the economic order. One of the main reasons why the crisis occupied the world agenda and affected the policies of countries is the dependence of Europe on Russia. In this process, although rests are constantly drawn between the parties, the Western World has implemented various sanctions to weaken Russia and neutralize the energy trump card.
One of the most important decisions taken by the West in this process was the application of a ceiling price for Russian petroleum products. As a matter of fact, a ceiling price limit of 60 dollars per barrel was imposed on Russian oil.[1] With this step, the West aimed for the collapse of the Russian economy and for Moscow to become unable to sustain the war by keeping the value of Russian energy below the world markets.
The Kremlin administration, on the other hand, has started to follow a policy of developing its relations with other states in a multidimensional way, including energy, in response to the step taken by the West. For this purpose, Russia, which started to sell cheap oil to India, wants to sell natural gas to Pakistan. It also offered gas union to the Central Asian states and deepened its relations with the Gulf countries.
The policy in question and the steps taken in this context have broken the effect of the West’s strategy to weaken Russia. In particular, the decision of the Organization of Petroleum Exporting Countries (OPEC) and OPEC+ to reduce oil production by 2 million barrels/day on October 5, 2022 gave Russia a breather.[2] Because the decreasing oil production led to an increase in prices in the energy markets during a period when the energy crisis intensified, Russia’s hand was strengthened and the West had to supply more expensive energy.
The cut of 2 million barrels was thought to be made from the production of Saudi Arabia and the United Arab Emirates (UAE). While this situation puts the West in trouble; it has also shaken the relations between the Gulf Countries and the Western World.[3] However, within the scope of the meeting within OPEC and OPEC+ held on April 2, 2023, it was decided to reduce oil production again, despite the reaction of the West.[4]
Among the OPEC and OPEC+ states, Saudi Arabia has announced that it will reduce by 500,000 barrels, Iraq 211,000, UAE 144,000, Kuwait 128,000, Kazakhstan 78,000, Algeria 48,000 and Oman 40,000 barrels/day. Thus, the states have voluntarily decided to cut about 1.15 million barrels per day in oil production in the context of “precautionary measure”. Russia also decided to extend a cut of 500,000 barrels until the end of 2023. The cuts, which will be implemented in May 2023, were taken in addition to the reduction decision in October 2022.[5] In other words, 3.16 million barrels of oil will not be produced in total.
The decision to reduce production will affect world politics, the global economy and the Ukraine War in various ways. First of all, it is obvious that it will adversely affect the world markets. Because decreasing oil production will mean an increase in energy prices. It can be said that especially Western countries and companies will come under significant pressure. The energy crisis that the Western World is trying to overcome will bring a significant economic burden to both European countries and the USA. Because, the decision taken at a time when various banks collapsed in the USA and the Western-centered economic system was shaken, will increase costs and deepen concerns. This situation will challenge the West’s plans to overcome the energy crisis and prepare for the next winter. At this point, one of the states that should not be ignored is China. Because the Beijing administration may have to import more expensive oil or it may turn to Russia’s cheap resources.
On the other hand, the effect of Western sanctions against Russia will weaken. Because Russia will gain the opportunity to sell the oil that it sells cheaply at a higher price. This situation will once again reveal the importance of Russia in energy. It is known that Russia sells oil cheaper than the ceiling price in order to break the effect of Western sanctions. Thanks to the oil prices that will increase with the decision of the cut, Russia will continue to continue the Ukraine War and will be able to act more confidently in a process where the West is under economic pressure.
As a result, it is obvious that the states that decide to reduce oil production act by taking into account their own national interests. In this sense, it can be argued that the actors in question think about politics, thinking that the Russia-Ukraine War and the West-Russia rivalry do not concern them. In this context, it is understood that oil producing and energy exporting countries are trying to increase their economic gains by taking advantage of increasing energy prices. However, this situation will increase the pressure and economic cost on the West and will make it easier for Russia to breathe. For this reason, it will increase Western pressure on states such as Saudi Arabia, Iraq and the UAE. USA, on the other hand, will read the resolution as support for Russia in the Ukraine War. As it will be remembered, similar criticisms have arisen from the USA in October 2022.
[1] “EU Sanctions Against Russia Following the Invasion of Ukraine”, European Commission, https://eu-solidarity-ukraine.ec.europa.eu/eu-sanctions-against-russia-following-invasion-ukraine_en, (Date of Accession: 04.04.2023).
[2] Salma El Wardany- vd., “OPEC+ Rebuked by US After Cutting Output to Keep Prices High”, Bloomberg, https://www.bloomberg.com/news/articles/2022-10-05/opec-panel-recommends-2-million-barrel-cut-to-output-limits, (Date of Accession: 04.04.2023).
[3] Emrah Kaya, “Rusya ve Körfez Ülkelerinin Enerji Dansı: ABD’nin Tepkileri”, ANKASAM, https://www.ankasam.org/rusya-ve-korfez-ulkelerinin-enerji-dansi-abdnin-tepkileri/#_edn1, (Date of Accession: 04.04.2023).
[4] “Kazakhstan to Cut Oil Production Following Latest OPEC Agreement”, The Astana Times, https://astanatimes.com/2023/04/kazakhstan-to-cut-oil-production-following-latest-opec-agreement/, (Date of Accession: 04.04.2023).
[5] “OPEC+ Oil Alliance Announces Surprise Production Cuts from May”, Al Jazeera, https://www.aljazeera.com/news/2023/4/2/opec-oil-alliance-announces-surprise-production-cuts-from-may, (Date of Accession: 04.04.2023).
