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Russia’s state-controlled giant Rosneft will not freeze its production as part of potential non-OPEC and OPEC global efforts to prop up crude prices, Reuters quoted Rosneft’s chief executive Igor Sechin as saying, just after Russian President Vladimir Putin had stated that his country was ready to join OPEC’s attempts to rebalance the market.
Russia is denying the change of heart, saying that Sechin’s words to the contrary “may be quoted out of context”, Russian TASS agency reported on Tuesday, quoting Dmitry Peskov, press secretary of the Russian President.
“Indeed, the official position was presented by President Vladimir Putin that it is desirable to freeze volumes or contract them,” Peskov said.
As quoted by Reuters earlier today, Sechin - when asked if Rosneft might limit its production – said late on Monday, “Why should we do it?”
“Try to answer this question yourself: would Iran, Saudi Arabia or Venezuela cut their production?” Sechin went on to comment on a possible OPEC agreement.
Last month, OPEC members agreed to discuss a deal to limit production to a range of between 32.5 million barrels per day and 33 million bpd.
Oil prices surged immediately after the deal-to-make-a-deal was announced on September 28, but later waned on skepticism whether OPEC producers may actually reach a specific deal and stick to it.
On Monday crude prices spiked again, this time to one-year-highs, after Putin entered the output freeze/cut rhetoric and after Saudi Arabia’s energy minister Khalid al-Falih said he was optimistic that major oil producers would agree to cut production by November, and that $60-a-barrel prices were not out of the question.
On Tuesday, prices made a U-turn and headed downward after the International Energy Agency reported that oil output in OPEC reached a new record of 33.64 million bpd.
At the time of writing, WTI Crude was down 1.79 percent to US$50.43, while Brent Crude traded down 1.86 percent at US$52.15.
The market is bound to be highly volatile in the coming weeks, as investors, analysts and traders will question not only Russia’s ability to possibly get its giant oil firms to cap production, but also if power plays within OPEC will allow it to reach a real deal on oil production limits.
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.