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Russia’s Energy Minister Alexander Novak is meeting with executives of Russia’s oil companies on Monday to discuss the OPEC+ production cut deal, Russian media reported.
Russia is the leader of the non-OPEC group of producers in the OPEC+ pact, which is currently withholding a total of 7.7 million barrels per day (bpd) from the market in the hopes of stabilizing oil prices and drawing down global oil inventories after the pandemic crashed oil demand earlier this year.
Since the start of the OPEC+ cooperation in 2017, Russian oil companies have often expressed their disapproval of the cuts that Russia has pledged to follow, arguing that they are reducing production only to help oil prices move higher and unleash more production from rival producers, mostly from the U.S. shale patch.
OPEC+ plans to have the cuts eased by 2 million bpd beginning in January 2020. However, the fragile oil market and the second COVID-19 wave with renewed lockdowns in major European economies are threatening the pace of global economic and oil demand recovery. Market speculation is already ripe that OPEC+ should, and probably would, delay the easing of the cuts until there is more certainty about the demand recovery.
In early October, Russia’s Novak said that the OPEC+ alliance was optimistic that it would be able to gradually ease production cuts from January as planned, despite surging coronavirus cases in many countries. Two weeks later, Russian President Vladimir Putin said that he was not ruling out OPEC+ delaying the easing of the cuts, or even making further reductions.
Before talking to its partners, Russia is now gauging the sentiment among its domestic oil producers, with Novak meeting with the executives today.
The ultimate decision-maker, however, will be Putin, who continues to keep close contact with the Crown Prince of OPEC’s top producer and de facto leader, Saudi Arabia, Mohammed bin Salman.
Putin and the crown prince discussed the oil market in the middle of October and “stressed again their readiness to continue close coordination in this area in the interests of maintaining stability in the global fuel market,” the Kremlin said.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com