Consequences for Russia's economy: OPEC countries want to flood the market with oil

op-online Consequences for Russia's economy: OPEC countries want to flood the market with oil March 31, 2025, 8:47 p.m. Lars-Eric Nievelstein OPEC could end a major production restriction. This, in turn, could lead to lower oil prices. What does this mean for Russia? Vienna – Oil exports support Russia's economy. Western nations have been trying for years to curb the enormous profits, for which the G7 countries, for example, introduced an oil price cap. At the end of March, US President Donald Trump also announced higher tariffs on Russian oil. Now the oil cartel OPEC itself could bring about a price reduction – and Russia is joining in. Oil production restrictions to end in April – OPEC had reduced oil production in 2023 The eight oil-exporting countries of the OPEC+ group want to allow a major production restriction to expire starting Tuesday (April 1). This would mean that the oil association, made up of members of the Organization of the Petroleum Exporting Countries (OPEC) and other producing countries (including Russia), would increase the oil supply. This would reverse a decision made in 2023 to cut daily production by 2.2 million barrels. The announcement came at the beginning of March 2025 and had significantly eased oil prices on the markets. As soon as the production cuts are lifted, further effects are expected to be felt on the markets. "The de facto increase in oil supply is likely to come into focus and put pressure on prices," commented Barbara Lambrecht, commodities expert at Commerzbank. According to the German Press Agency (dpa), this should also affect heating oil prices, albeit with a delay, as the heating season is just ending and price developments will only become more of a focus for Germans again in the fall. "Impulse towards lower oil prices" – OPEC decision could make fueling cheaper The situation is different for gasoline and diesel. "If production is expanded, it will definitely be a stimulus toward lower oil prices," said Christian Laberer, fuel market expert at the ADAC (German Automobile Club). However, the approved expansion is expected to have only a small effect – the oil price could fall by a few dollars, while the price of fuel could fall by a few cents. Even that would only be expected if the oil companies pass on the price decline on the global market to consumers at the gas stations. Handelsblatt, for its part, reported in December 2024 that the oil market would be oversupplied even with the continued production cuts. The paper cited data from the International Energy Agency (IEA). Demand in China was "disappointing," and countries outside the US had also begun to increase oil production. These include the US, Canada, and Guyana. The major bank Morgan Stanley had recently revised its forecast for the price development of Brent crude oil downwards. This means that the already oversupplied oil market could gain an abundance of raw materials. OPEC decision could deprive Russia of revenue – or cause its disintegration This, in turn, could have significant repercussions for countries that rely on profits from oil sales. Russia is a prime example. Because the oil sector is so important to Russia, Western countries identified it early on as one of the best targets for sanctions. However, they only partially succeeded in limiting Russia's revenue from oil and gas sales – at least according to official Russian figures. Russian oil shipments, however, remain one of the Kremlin's most important sources of funding. According to Bloomberg, crude oil shipments from Russian ports rose to 3.45 million barrels per day in March 2025, the highest level since last October. The OPEC decision strikes a dangerous balance: Russia could sell more oil and therefore earn more money if it produces more oil, but the price must not fall too sharply due to the surplus. However, the Russian Central Bank sees an even greater risk. It has already warned that the US and OPEC have the capacity to flood the oil market with resources, thus triggering a repeat of the protracted price decline of the 1980s, which contributed to the fall of the Soviet Union.