Russia is still not sure whether it will freeze or cut its crude oil output, said Energy Minister Alexander Novak after his weekend meeting with his Saudi counterpart Khalid al-Falih. Al-Falih was even less precise, telling media after the meeting that, “We have managed today... through a common meeting to reach a common notion to what we can reach in November.”
The comments coming from both officials, vague and lacking in any real significance as they are, raise doubts about how motivated Russia is to cut or eve freeze its output. The doubts become especially evident in light of Novak’s earlier comments that Russia could raise its total output by 4.02 billion barrels next year, all the while verbally toeing the company line over Moscow’s support for OPEC’s freeze.
What’s more, just days ago, Rosneft’s head Igor Sechin said at the 5th Eurasian forum in Italy that Russia could expand its daily production by another 4 million barrels, “if the market needs it.” That comes within the context of Sechin’s prediction that the global oil market will return to balance by mid-2017—very likely thanks to the very freeze that Russian government officials are supporting, but without saying anything specific.
Saudi Arabia also took its time after it became the country that initiated this latest round of negotiations after the Doha talks, proposed by Russia in the spring, fell through.
Saudi Arabia was so intent on agreeing to a freeze that it basically exempted Nigeria, Libya, and Iran from the new, lower quotas that are being negotiated on the grounds that all three countries have suffered a serious market share decline, so they are not on an equal footing with the rest of OPEC.
Meanwhile, Iraq’s Oil Minister said on Sunday the country wishes to join these three OPEC members. Jabber al-Luaibi said, “We are with OPEC policy and OPEC unity,” Al-Luaibi said. “But this should not be at our expense.”
In early afternoon trade in Asia, Brent crude was down 0.5 percent to US$51.54 a barrel, and WTI was down 0.6 percent to US$50.55 on Comex.
By Irina Slav for Oilprice.com
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