Russia has started to concede that it needs to join a fresh Saudi-led oil production cut, but is still bargaining with its key partner in OPEC over how much, how fast, and for how long it would potentially reduce its oil output, Reuters reported on Thursday, citing two industry sources.
For nearly a month-since an OPEC/non-OPEC panel signaled that there might be a need to cut oil production by 1 million bpd to balance the market-Russia has warned against any hasty decisions on new production cuts and has not officially said that a cut is needed.
While Saudi Arabia and its Energy Minister Khalid al-Falih have been airing the idea of a new production cut, Russia has been less convinced that it could take part in another reduction, or at least so it lets the market to believe.
Moscow, however, has repeatedly said that its cooperation with OPEC should and will continue.
Just yesterday, Russian President Vladimir Putin said that Russia was comfortable with the current level of oil prices at around $60 a barrel, and also thanked Saudi Arabia and its Crown Prince Mohammed bin Salman for the OPEC-Russia cooperation in managing the oil market.
Putin is scheduled to meet the prince at the G-20 summit in Buenos Aires later this week.
Russia's energy ministry is discussing potential oil production cuts with local producers and will continue talks to come up with a position by the OPEC/non-OPEC meeting in early December, Energy Minister Alexander Novak said last week. Another meeting with Russian oil companies was held on Tuesday.
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"The idea at the meeting was that Russia needs to reduce. The key question is how quickly and by how much," a source familiar with the discussions between the Russian energy ministry and local oil companies told Reuters on Thursday.
Most people agreed that Russia can't immediately reduce production and if it joins the cuts, it will cut output gradually, like it did the previous time, the source told Reuters.
There is need of a cut, but Russia doesn't want to chip in with a large cut, a second source told Reuters.
Analysts believe that Russia agreeing to reduce production would be crucial for the OPEC/non-OPEC group to hammer out an agreement to cut. Saudi Arabia's al-Falih has already said that while the Saudis are going to do whatever it takes to stabilize the oil market, they can't and won't do it alone without a collective decision from the OPEC and non-OPEC deal participants.
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