Russia is using natural gas to punish Europe. Oil hasn’t yet been similarly weaponized, but talk of buyers imposing a price cap raises the risk that it could be.
The Organization of the Petroleum Exporting Countries and Moscow-led allies decided on Monday toreduce its output by 100,000 barrels a day starting in October. Since Russia’s invasion of Ukraine, the cartel, and Saudi Arabia in particular, had been at pains to maintain a broadly neutral stance between its key partners in Moscow and the West. Monday’s decision, which flies in the face of U.S. demands for higher output, might just be a response to uncertain global oil demand, but there is also a more unsettling interpretation: OPEC could be sending a warning shot that Western efforts to cap Russian crude prices will be met with retaliation if they threaten the cartel’s price-setting power.