OPEC and its Russia-led non-OPEC allies could push Brent Crude prices back to $60 a barrel if the coalition agrees to deepen the cuts by up to 1 million bpd, a senior executive at Russia’s second largest oil producer, Lukoil, told Reuters on Tuesday.
OPEC and its allies meet in Vienna later this week to coordinate a joint action in response to the slump in demand and oil prices due to the coronavirus outbreak.
The OPEC+ group’s joint technical committee (JTC) issued a proposal early last month that the producers extend the cuts as-is until the end of 2020 and deepen those cuts in the second quarter in response to the fact that the coronavirus “has had a negative impact on oil demand and oil markets.”
Last week, OPEC’s leader Saudi Arabia was said to be asking members of the OPEC+ group to consider an additional collective cut of 1 million bpd—
that is 400,000 bpd higher than the initial proposal of the panel.
Russia continues to refuse to announce its position regarding deeper cuts by the OPEC+ coalition, but over the weekend Russian President Vladimir Putin suggested that Moscow will continue to play ball and cooperate with OPEC, although it sees current oil prices as “acceptable.”
Speaking to Reuters, Lukoil’s Vice President Leonid Fedun said that a collective OPEC+ cut of between 600,000 bpd and 1 million bpd would be sufficient to push Brent back up to $60 a barrel.
The comments of a top executive from Russia’s second biggest oil producer suggest that Russia will continue its cooperation with OPEC.
“We are ready to cut [our oil production] as much as we are told to. Better to sell less oil but at a higher price,” Fedun told Reuters.
On Monday, the executive told reporters he expects the OPEC+ group to reduce more than 1 million bpd of their collective production, with Russia cutting its output by 200,000 bpd-300,000 bpd.
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By Tsvetana Paraskova for Oilprice.com
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