Nov. 2 (UPI) — U.S. sanctions that target the Russian energy sector won’t do anything to influence the country’s crude oil production, the country’s energy minister said.
The U.S. Office of Foreign Assets Control amended Russian sanctions with respect to the energy sector, blocking U.S. entities from helping with companies with “the potential” to produce oil in Russian territory or shale projects anywhere in the world. The amended list makes reference to projects “initiated on or after Jan. 29.”
Russian Energy Minister Alexander Novak said Thursday the sanctions are nothing new, relate mostly to foreign projects where Russian companies have more than a 35 percent interest and deal only with new projects slated for a January start date.
“On the whole, it is not going to affect Russia’s production,” he was quoted by Russian news agency Tass as saying.
The Kremlin said earlier this week that sanctions were designed to give the United States a competitive edge in the European energy sector. A spokesperson for Polish energy company PKN Orlen confirmed to UPI on Thursday that it recently purchased about 730,000 barrels of crude oil from the United States.
Russia’s stance on oil production matters for the broader market because it’s the largest contributor to an effort to balance an over-supplied market with production cuts that’s not a member of the Organization of Petroleum Exporting Countries.
The OPEC-led effort sidelines about 1.8 million barrels per day from the market and, while more U.S. oil is on the open market, most of that is going to Asian economies where it’s competitive against other grades. The price for West Texas Intermediate, the U.S. benchmark for the price of oil, was $3.90 per barrel less than Dubai, a Middle East benchmark, and $4.80 less than Urals, the Russian benchmark, early Thursday.
Saudi Arabia, the de facto head of OPEC, has suggested it was ready to do whatever it takes to balance the market and several ministers have hinted the agreement could be extended deep into 2018.
Novak last month said the agreement could be extended into summer 2018.