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Russia Still A Holdout On Deeper OPEC+ Oil Production Cuts

While a technical panel of the OPEC+ coalition is recommending an additional cut of 600,000 bpd in response to the lower oil demand due to the coronavirus outbreak, OPEC’s key ally in the deal, Russia, continues to be a holdout on the need to cut deeper to counter the oil price slide.

After three days of discussions of the OPEC+ Joint Technical Committee (JTC) in Vienna, the panel is reportedly recommending a deeper cut, of 600,000 bpd.

But Russia, which has sent delegates to the committee’s meeting, has been uncertain about further cuts all week, and is now asking for more time to have the top officials at home review the recommendation and the market situation, delegates told media on Thursday.

Russia’s Energy Minister Alexander Novak reiterated in Moscow today that it is too early to talk about any decision that should be taken as part of the OPEC+ deal.

Russia has been reluctant to commit to cuts in all of the previous OPEC+ meetings, before agreeing to play ball in the eleventh hour.

The current consultations and discussions don’t look too different from previous such ‘rifts’ between Russia and OPEC, led by Saudi Arabia, which is pushing for deeper cuts as oil prices are now below the Kingdom’s comfort range and much lower than $80-plus a barrel Brent it needs to balance its budget this year.

Russia is not so desperate to see oil prices so high—it has consistently budgeted for lower oil prices than the actual ones since the 2014 price collapse, and as a result is much more resilient to price drops than Saudi Arabia.

Speaking to reporters on Thursday, Russia’s Novak said he is not ready to say whether Russia is ready or not to agree to deeper cuts, because the situation on the market is still unclear.

It will take more time to have a clearer view on the impact of the coronavirus on the global oil market, Novak said.  

By Tsvetana Paraskova for Oilprice.com

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