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Russia’s President Vladimir Putin has contradicted the position by OPEC+ that its 1.2 million barrels per day production cut announced in April was intended to balance the markets, with the Russian leader saying it was necessary to maintain relatively high oil prices.
According to Putin, the situation in the global oil markets is "absolutely stable" as Russia maintains output cuts in a bid to support prices adding that Russia was cutting production at the "required level".
"But all our actions, including those related to voluntary production cuts, are connected precisely with the need to maintain a certain price environment on world markets, in dialogue and contact with our partners in OPEC+," Putin added.
A week ago, the UAE energy minister Suhail al-Mazrouei told Reuters that additional voluntary output cuts by the OPEC+ producer group were implemented to balance the oil markets.
"I'm not that worried about the very short term, I think we can manage balancing the supply with demand. I'm more worried about the level of investment required for years to come," he said.
The United States and Europe have been strongly opposed to production cuts by the cartel, with President Joe Biden’s administration accusing Saudi Arabia of colluding with Russia and supporting its war in Ukraine shortly after OPEC+ announced the first cuts.
"The Saudi Foreign Ministry can try to spin or deflect, but the facts are simple, this will increase Russian revenues and blunt the effectiveness of sanctions," National Security Council spokesman John Kirby said in a strongly worded statement in October.
U.S.-based Energy Information Administration (EIA) recently revised down its crude oil price forecast in the May Short-Term Energy Outlook (STEO) and said the recent declines in oil prices were triggered by concerns about China’s economic growth as well as concerns regarding a possible U.S. recession.
The EIA has predicted that a drop in OPEC production as well as seasonal increases in demand will ‘‘…slightly raise prices over the next few months.’’
By Alex Kimani for Oilprice.com
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Alex Kimani is a veteran finance writer, investor, engineer and researcher for Safehaven.com.