Russia is in favor of a continued partnership with OPEC that does not need to be limited to oil production control, Russia’s President Vladimir Putin said after the BRICS summit that took place in Brazil this week.
"A constructive dialogue has been established with OPEC. We understand where this tough position [on cutting output] comes from, including the position of our friends in Saudi Arabia on Saudi Aramco IPO," the Russian President said, as quoted by TASS.
"They have their own interests, and we should respect that, which is what we are doing. When it comes to prospects for cooperation, it will not be limited to regulating output."
"The system of relations between Russia, OPEC and non-OPEC countries represents an effective instrument of maintaining the balance on the global energy market that is important for everyone, both consumers and producers," Putin added.
Russia has become instrumental for OPEC’s success in propping up prices by placing caps on production. The world’s second-largest oil producer after the United States had just the right amount of clout and direct influence on oil markets to help quench concerns about an oversupply. In fact, Russia’s role in the cuts led some analysts to argue that it is now the de facto leader of OPEC even if it is not a member and has no plans for membership. Related: Top U.S. Gas Producer Looks To Ditch Major Shale Assets
Russia’s leverage lies in the fact it can function better than OPEC members at lower oil prices. In other words, for Russia, the production cuts are not a question of life and budget deficit. Yet by joining OPEC in its production control drive, Moscow has put itself into a position where it can ask for favors in return, notably from Saudi Arabia, which has already pledged sizeable investments in Russian energy projects, including in oil and LNG.
OPEC and Russia are meeting next month to discuss the next steps in their partnership and the production cut agreement.
By Irina Slav for Oilprice.com
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