The Opec cartel has warned it could take immediate action on adjusting oil output as the group of producing nations braces for the fallout of fresh Western sanctions on Russia.
Opec, which comprises 23 nations including Saudi Arabia, said it was maintaining its policy of reducing production by two million barrels per day which came into force last month and will run to the end of next year.
However, the group said it was ready to “meet at any time” and could “take immediate additional measures”.
It comes as oil markets prepare for renewed volatility, with fresh price caps set to come into force on Russian oil on Monday. The EU, G7 nations and Australia have all agreed to set a cap of $60 a barrel in a bid to stop Moscow from profiteering from oil exports in the wake of Vladimir Putin's invasion of Ukraine.
The caps, which were agreed last week and will come into force on Monday, coincide with an EU ban on seaborne crude imports from Russia.
Bill Farren-Price, head of macro oil and gas research at Enverus, said: “Faced with a raft of uncertainties on Russian sanctions and the price cap, Opec has held back for now. But the threat of further cuts is real. The group is in supply management mode.”
Russia’s deputy prime minister Alexander Novak said on Sunday that it would not sell Russian oil under a price cap and warned that the move would destabilise global energy markets by triggering a shortage of supply.
He said: “We will sell oil and petroleum products only to those countries that will work with us under market conditions, even if we have to reduce production a little.”
Russia is one of the world's largest oil producers, behind Saudi Arabia.
Opec’s decision follows accusations that Saudi Arabia had sided with Russia to maintain a stranglehold on oil exports and prevent prices from falling further.
When Opec announced the production cut in October, it argued that it was because of the poorer economic outlook. However, the White House said it “was clear” that Opec was aligning with Russia by cutting output.
Oil prices have fallen in the past few weeks amid strict Covid lockdowns in China and higher global interest rates.
Brent crude prices hit a low of around $80 late last month, although have since ticked slightly higher to reach $89 as of Friday. However, prices are still significantly below the $139 they were trading at earlier this year in the wake of Russia's invasion of Ukraine, a 14-year high.
Ahead of the meeting, analysts had warned that a further cut to output was needed to ensure prices did not fall any more.
Helima Croft, an analyst at RBC Capital Markets, said: “While proponents of the price caps maintain that it will avert a major oil disruption, we are waiting to see if Moscow has other plans come Monday.”