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15 Mar, 2023 09:40

Saudi Arabia threatens oil embargo

Riyadh is worried about the precedent set by Western policies in relation to Russian crude
Saudi Arabia threatens oil embargo

Saudi Energy Minister Prince Abdulaziz bin Salman has warned Western states against capping the price of crude oil supplied by the kingdom, adding that any attempts to impose a ceiling would be met with a halt of sales and production cuts.

He added that other major oil producers would most likely follow suit.

“So, if a price cap were to be imposed on Saudi oil exports, we will not sell oil to any country that imposes a price cap on our supply, and we will reduce oil production, and I would not be surprised if others do the same,” bin Salman said in an interview with Energy Intelligence on Tuesday.

According to the minister, price-cap policies inevitably exacerbate market instability and volatility, and would negatively impact the entire oil industry across the globe.

He compared the oil-price cap with the US proposal to adopt the so-called NOPEC legislation, stressing that the potential impact of such measures on the oil market are similar. NOPEC (No Oil Producing and Exporting Cartels Act) would allow OPEC and national oil companies to be sued under US antitrust law for anti-competitive attempts to limit global supply of oil and the subsequent impact on crude prices.

In December, the EU, G7 nations, and their allies introduced a collective ban on Russian seaborne oil exports, along with a price cap of $60 per barrel. Another embargo banning almost all imports of Russian oil products, as well as introducing price caps on diesel and other petroleum products, kicked in on February 5.

Moscow has opposed any attempts to cap the price of its energy exports. The Russian authorities have forbidden any oil deals under the price-cap scheme. In February, Russia announced plans to voluntarily reduce oil production in March by 500,000 barrels per day as it halts sales to buyers that comply with a Western-imposed price ceiling.   

According to the Saudi oil minister, the policies pursued by the West add “new layers of risk and uncertainty” to the global oil market “at a time when clarity and stability are most needed.”

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