By September 1, 2015 0 Comments Read More →

OPEC, Russia considering talks to stabilize global oil prices

Both OPEC and Russia emphasized they do not want to bear brunt of production cuts

OPEC and Russia appear ready to discuss efforts to stabilize global oil prices, though both parties are downplaying significant production cuts.

OPEC

Russian energy minister Alexander Novak.

“Russia’s energy minister Alexander Novak [earlier] held consultations and took part in OPEC oil ministers’ meetings. If there is an invitation for the next meeting, he will naturally go and take part in those consultations,” Deputy Prime Minister Arkady Dvorkovich was quoted by Russian Prime news agency.

Platts is reporting that in November 2014, just before OPEC announced its market-share strategy, Russian oil minister Novak participated in a meeting with Saudi oil minister Ali Naimi, Venezuelan foreign minister Rafael Ramirez, Mexican energy minister Pedro Joaquin Coldwell and Rosneft CEO Igor Sechin that failed to reach an accord on a coordinated production cut.

Most recently, Novak met with OPEC secretary general Abdalla el-Badri in in June, during an OPEC seminar in Moscow.

However, Dvorkovich cautioned that lower production might occur in response to low prices, not as a result of a strategy by Moscow to shore up the market.

“It’s quite possible that if oil prices remain at the low levels for long, oil production could decline, as had been the case before. Anyway, we don’t expect any significant cuts,” Dvorkovich said according to TASS.

According to Reuters, Dvorkovich says it would be technically difficult to restore oil production in Russia if output is cut deliberately. Russia has been pumping oil more than 10.7 million barrels per day and expects to maintain high levels of output next year.

Venezuela is one of the junior OPEC members hit particularly hard by the cartel’s decision to maintain high levels of production. President Nicolas Maduro will discuss “possible mutual steps” to stabilize global oil prices when he and Russian President Vladimir Putin visit China this week.

OPEC said in its latest bulletin published Monday that cooperation between oil-producing countries “is and will always remain the key to oil’s future and that is why dialog among the main stakeholders is so important going forward.”

“There is no quick fix, but if there is a willingness to face the oil industry’s challenges together, then the prospects for the future have to be a lot better than what everyone involved in the industry has been experiencing over the past nine months or so,” it added.

OPEC cautioned, according to Platts, that any discussions would have to be “on a level playing field,” indicating that it would not bear the brunt of a supply cut decision solely.

“OPEC will protect its own interests,” it said. “As developing countries, its members, whose economies rely heavily on this one precious resource, can ill afford to do otherwise.”

 

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