The G7 urges OPEC to increase production to cool the oil market

The G7 urges OPEC to increase production to cool the oil market

G7 energy ministers have called on OPEC’s oil-producing group to pump more oil as Russia’s war in Ukraine pushes oil prices to its highest levels in a decade.

The call was included in the final communiqué from the G7 meeting of energy and environment ministers in Germany, which chairs the group of advanced industrial economies.

Ministers noted that the war had caused oil, gas and coal prices to rise, leading to a sharp rise in inflation, which had a significant burden on low-income households, as well as businesses and industry.

“We call on oil and gas producing countries to act responsibly and respond to tightening international markets, with OPEC playing a key role,” the ministers said.

They also stated that it was a “special urgency” for the EU to reduce its dependence on Russian natural gas, and emphasized the important role that increased liquefied natural gas (LNG) supplies could play “in mitigating potential pipeline disruptions. gas, in particular to European markets “.

Earlier this month, G7 leaders pledged their countries to phase out their dependence on Russian energy, including a ban on Russian oil imports.

The EU is also discussing the possibility of an embargo on Russian oil, although Hungary is against it.

Despite the G7’s common position on oil, it is not clear whether oil-producing countries will heed their call for further action. Saudi Arabia is resisting Western pressure to accelerate production growth to help reduce prices, and insists there is no shortage of supply.

The Opec + group, which includes Russia, reduced production under pandemic production agreements before gradually resuming it at 400,000 barrels a day each month. Oil prices have nearly doubled in the past year, trading near $ 120 a barrel, the highest level since 2014, leading to criticism from Gulf states such as Saudi Arabia with free production capacity.

The kingdom also does not add quotas for members who have difficulty resuming production, and many argue that the group has left the market with a shortage of supplies.

Saudi Arabia signaled this month that it will stand by Russia as a member of OPEC + despite the tightening of Western sanctions against Moscow.

Prince Abdulaziz bin Salman, Saudi Arabia’s energy minister, said Riyadh had hoped to “draw up an agreement with Opec +. . . insists that “the world should appreciate the value” of the producers’ alliance.

His comments were an important sign of Russia’s support for the traditional US ally and came amid growing West efforts to isolate Moscow and declining Russian oil production.

G7 ministers have also pledged for the first time to decarbonise their electricity sectors by 2035 and eventually phase out coal-fired power generation as part of efforts to reduce greenhouse gas emissions.

This is a significant step for G7 Member States, Japan and Canada. The US and Germany already had a zero carbon target by 2035, and the UK target is earlier.

However, the ministers stopped by the promise that coal energy would end by 2030, a proposal put forward by Berlin. According to people familiar with the discussions, the promise was removed due to opposition from the United States and Japan.

In the communiqué, the G7 commits itself to the goal of “achieving predominantly decarbonised electricity sectors by 2035” and “concrete and timely steps towards the goal of a possible phasing out of domestic electricity production from coal without reducing emissions”.

More news from David Sheppard in London

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