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Will Energy Secretary Perry Ask Russia For More Oil?

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Energy analysts expect Energy Secretary Rick Perry might ask his Russian counterpart Alexander Novak for more oil to compensate for lost supply from the Iranian sanctions when they meet this week at the World Gas Conference in Washington.

CNBC reports that Perry referred to the OPEC+ production increase agreement reached last week as being “a little short” of what was necessary to avoid a supply crunch. He also quoted a number of analysts that said Russia could be in a position to help ease this concern.

The message from the experts seems to run like this: Russia was the one that got Iran on board with the production increase, which kept the whole deal from falling through. The U.S. will benefit from the production increase, so it should be grateful to Russia for managing to get Iran to agree to the production boost. To repay the favor, Washington might want to consider some sanction relief for Moscow.

Of course, all this is speculation at this point. Indeed, Russia has been instrumental in keeping some semblance of civility between Iran and Saudi Arabia at this meeting and getting Tehran to agree to the raise. It has been under sanctions for four years now and they are only growing in number and severity, so seeking relief from some of these would make sense. But at the same time, Russia remains a close ally of Iran, and that’s not something that will sit well with Washington.

All things considered, what we are seeing now is a rare alignment in U.S. and Russian energy interests: the U.S. needs lower prices to keep drivers happy or at least less unhappy amid higher driving season prices at the pump; Russian oil companies are itching to start pumping more, which will lead to lower prices. The two sides might do well to make the best of this alignment while it lasts.

By Irina Slav for Oilprice.com

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  • Lee James on June 27 2018 said:
    Remember, such an imagined Grand Bargain with Russia follows on the heels of our supposed Energy Revolution, where many folks imagine that we are a net exporter of oil.

    And, Russia is allied with Iran. Can the politics get any weirder?

    Russia is playing us. They know how to look after their best interest and make it look like some magnanimous gesture. They mostly buy weapons with oil revenue.

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