Russia ready to join OPEC effort to limit oil supply: Putin

PUBLISHED : Tuesday, 11 October, 2016, 1:14am
UPDATED : Tuesday, 11 October, 2016, 2:25am

Russia, the world’s largest energy exporter, is ready to join OPEC in limiting oil production with either a freeze or a cut, said President Vladimir Putin.

“Russia is ready to join in joint measures to limit output and calls on other oil exporters to do the same,” Putin said on Monday at the World Energy Congress in Istanbul. “In the current situation, we think that a freeze or even a cut in oil production is probably the only proper decision to preserve stability in the global energy market.”

Ministers from some of the largest oil-producing nations are gathering in Turkey this week to discuss ways to end a two-year supply glut. With benchmark Brent crude trading at about US$52 a barrel -- less than half its price in mid-2014 -- countries from Saudi Arabia to Russia remain under severe economic pressure.

Last month in Algiers, the Organization of Petroleum Exporting Countries reversed its policy of pumping without constraints, helping boost prices.

Even so, a lot of work needs to be done by the next OPEC meeting on November 30, with crucial details still to be resolved on how the burden of cuts will be shared, or whether producers outside the group will cooperate.

Russia would prefer to freeze its output at current levels rather than make reductions, Energy Minister Alexander Novak said earlier Monday in Istanbul. Russia has pumped 11.2 million barrels a day of oil so far in October, beating a post-Soviet record, according to preliminary data from the Energy Ministry’s CDU-TEK unit.

US energy envoy: OPEC production deal will not work

Putin said he hoped OPEC would agree in November on limits to its crude production and that Russia was ready to back such a decision, while remaining a reliable energy supplier.

“We support OPEC’s recent initiative to cap output and think that at the OPEC meeting in November this idea will materialise in a specific agreement, giving a positive signal to the markets and investors,” Putin said.

Brent crude climbed as much as 1.7 per cent to $52.80 a barrel Monday amid signs that Russia and Saudi Arabia could be moving closer to a supply agreement. The international benchmark has gained 15 per cent since OPEC agreed last month on the first supply curbs in eight years.

“Traders have welcomed the news from Russia that it is ready to join other members to adopt sensible strategy to curb the supply and stabilise the price,” Naeem Aslam, chief market analyst at ThinkMarkets UK Ltd., said by e-mail. “Caution may be the best practise. If history tells us anything, it is that these major oil players also have the habit to not respect the agreed agreement.”