“In my view, the current price range of oil is comfortable for both producers and consumers,” said Russia’s Energy Minister Alexander Novak in an interview with news agency TASS.
The official added that the US$80+ Brent crude prices we saw earlier this year were a temporary thing that had to do mostly with the uncertainty surrounding Iran, which prompted a lot of speculative oil buying. Now the price has corrected, although uncertainty around Iran remains.
Novak’s interview comes on the heels of a Reuters report citing sources from the oil industry speaking on condition of anonymity that said the Kremlin had accepted the need to reduce production again at a meeting between government officials and representatives of local oil companies.
“The idea at the meeting was that Russia needs to reduce. The key question is how quickly and by how much,” one of the Reuters sources said, adding “Most people agreed that we cannot reduce immediately, it needs to be a gradual process like last time.”
According to Novak, the Energy Ministry has yet to finalize its position on the cuts ahead of the Vienna meeting with OPEC, declining to suggest any size of production cuts if Russia agrees to them.
To finalize this position, Novak said, Moscow will take into account factors such as global oil supply as of end-November, production in different countries, Iranian exports, and the latest developments in the U.S.-China trade spat.
Yet it seems Russian companies are ready to start cutting if OPEC+ reaches an agreement at next week’s meeting. According to Reuters, if the cartel agrees a cut of 1 million bpd, Russia’s portion would come in at 166,000 bpd. That’s a little more than half of what Russian producers agreed to cut in 2016. That cut represented a sixth of Russia’s total, but, one of the Reuters’ sources said, “It was also said [at the meeting with companies] that reducing by one sixth this time is a big ask.”
By Irina Slav for Oilprice.com
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