Russian Federation oil companies should decide to cut production, not state: deputy PM

This week, the head of OPEC called on global oil producers who are not a part of the group to help in cutting down global oversupplies and signaled that it won’t do it alone. The Russian ruble strengthened on the currency exchange rates against the dollar and euro trading at 75.89 rubles to the dollar and 82.92 rubles to the euro in a reaction to growing Brent oil prices of around $35 to the barrel, according to Moscow exchange market statistics.

This is essentially why Saudi Arabia has maintained current oil production levels, despite its own estimate that the world is producing 3 million more barrels of oil per day than it needs.

That applies particularly to Russian Federation, which is very dependent on oil revenues and also facing technical difficulties in reducing production in winter. “But overall we expect a rebound in oil prices”. “Saudi Arabia’s position has always been, as they have publicly commented, that the market will balance itself at lower oil prices”, he said.

“Indeed, these parameters were proposed, to cut production by each country by up to 5 percent”, Novak said when asked if Saudi Arabia had made a proposal to cut output.

Finally, Reuters suggested that “it is too early” to determine if OPEC members can reach any agreement to cut production.

“From our point of view, it is unlikely that all the countries within OPEC can agree on production cuts, let alone those countries which are not in the OPEC coalition”, Russia’s RIA news agency quoted Novak at the time, citing an interview with business channel RBC TV.

A turnaround in oil’s fortunes would be welcomed by oil-rich countries where the price collapse has caused budget squeezes and political turmoil with some even forced to devalue their currencies.

Opec kept pumping oil to fight for market share against higher-cost shale producers, which pushed down oil prices further.

“It’s possible that Russian Federation could be testing the waters to gauge how OPEC members would respond to the idea of cuts”, Jason Bordoff, director of the Center on Global Energy Policy at Columbia University and a former senior oil official at the White House told Bloomberg.

Last year Russia’s oil production hit a post-Soviet high of 10.7 million barrels a day on average.

“The reduction in production in Russian Federation and Saudi Arabia (on the condition that both sides will reduce it – Gazeta.ru) would reduce global production by more than one percent”, Krylov said.