Russia doesn’t need oil prices to be too high and sees the $60-65 a barrel price—the price at which Brent Crude currently trades—as “quite satisfactory,” Russian President Vladimir Putin said at a meeting with media on Thursday.
“The Russian processing industry itself is not interested in very high oil prices. Well, the average price around 60-65 dollars per barrel is quite satisfactory, we don’t need to drive up [price] to the top, we already have a decent margin, in terms of budget,” Russian news agency TASS quoted Putin as saying at the meeting with heads of news agencies today.
Russia’s budget is based on a price of oil at $40 a barrel, the president said, adding that at that price Moscow can replenish its gold and forex reserves.
Russia will consider all factors currently shaping the oil market, including the production declines in Iran and Venezuela and the risk of outages in Nigeria and Libya, as well as demand for crude and refined oil products in the summer, Putin said, but refrained from commenting on what Russia and its OPEC partners should do next.
At the end of November last year, just before OPEC and its Russia-led allies decided to implement another round of production cuts until June this year, Putin said that $60 oil is comfortable enough for Russia.
However, OPEC and Saudi Arabia, the cartel’s de facto leader and key partner of Russia in the OPEC+ deal, are definitely not comfortable with oil prices at $60, as Saudi Arabia needs the price of oil at $85 to balance its budget. Related: Oil Sands Production To Hit 4 Million Bpd By 2030
Russia and Putin are not giving away any hints into what the Russian position would be at the next OPEC+ meeting currently scheduled for June 25-26.
Yet, Igor Sechin, the chief executive of Russia’s largest oil producer Rosneft, said earlier this week that the company was in talks with the government for possible compensation for losses in case OPEC+ decides to extend the production cut deal through the end of the year.
Due to the production cuts, Russia’s economy is expected to grow by just 1.2 percent in 2019, a downward revision from a previous estimate for 1.5-percent growth, the World Bank said this week.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More