Russia would not support a decision by OPEC+ to cut oil production, the Wall Street Journal has reported, citing unnamed sources close to the cartel.
While several OPEC members have signaled support for such a move, including Saudi Arabia, Russia is not among them, according to the sources. The reason, they said, was that a supply cut might diminish its sway over large Asian oil buyers as it would be a signal there is more oil in the world than there is demand for.
Reuters reported, citing three sources from OPEC, that the extended cartel, which is meeting later today, will probably leave its quotas from September unchanged for October. Some, however, suggested an output cut as a way of countering the price slide that has seen Brent crude fall below $100 and stay there, and WTI fall below $90 per barrel last week.
According to the Wall Street Journal sources, Russia voiced its objections to a production cut last week at a preliminary meeting, where OPEC+ set as its baseline scenario an oil market supply surplus of 900,000 bpd for this year and next.
This scenario was misleading, the unnamed sources said, describing Russia’s stance, because they assumed that all OPEC+ members are producing as much as their quotas call for. In reality, OPEC specifically has been undershooting its production targets massively ever since it started ramping production back up following the pandemic cuts.
The gap between quotas and actual production has reached 3 million bpd in recent months, the Wall Street Journal noted.
At the same time, prices have been hit by deepening worries about the global economy. These fears are particularly potent in Europe and the U.S. as central banks on both sides of the Atlantic have signaled their desire to tighten at all costs, which could well lead to a major recession.
By Irina Slav for Oilprice.com
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