Vladimir Putin calls for non-OPEC support of the group’s production cap
Oil prices surged Monday as Russian President Vladimir Putin offered support for OPEC’s proposed production cap policy. Russia, the world’s largest energy exporter, is ready to join the group in limiting production with either a freeze or a cut, Putin said at the World Energy Congress in Istanbul.
“Russia is ready to join in joint measures to limit output and calls on other oil exporters to do the same,” Putin said. “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.”
Putin said that he hopes that OPEC will come out its meeting in November with an official agreement on production. At the end of September, sources inside OPEC indicated that the group plans to set a production target between 32.5 and 33.0 MMBOPD, without putting restrictions on members like Iran, which are trying to ramp up output.
The decision marks a change in strategy for the group, which in November 2014 decided to eschew its traditional role as swing producer to protect its market share, sending price plummeting to less than half of their value by early-2015. OPEC tried to negotiate a similar deal earlier this year, but was unable to come to an agreement with Iran, which wants to see its production return to the same level it saw prior to the implementation of international sanctions.
Even though this deal appears to be progressing, there are still details that need to be resolved before the group’s next meeting on November 30, including how the burden of the cuts will be shared, or whether producers outside the group will take part. 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.
The Russian president added that demand for traditional sources of energy like oil and gas will continue to grow.
“The demand for traditional energy supported not only the motorization and electrification of such huge countries and economies as China and India, but also by the continuing participation of oil and gas products in the most diverse areas of human life, in industrial processes,” he said.
