(London Post) Russia may attend an upcoming meeting with the world’s leading oil producing nations over low oil prices. Moscow says Saudi Arabia has proposed global production be cut to reduce a supply glut and boost sinking prices.
Energy Minister Alexander Novak on Thursday has confirmed “the possibility” of taking part in the February meeting and considering Saudi Arabia’s alleged proposal, according to the minister.
“Indeed, these parameters were proposed, to cut production by each country by up to 5 percent,” Novak said. “This is a subject for discussions, it’s too early to talk about,” he added.
Responding to Novak’s remarks, several OPEC representatives denied plans for a meeting with Russia. However, a senior Gulf delegate stated that “Gulf OPEC countries and Saudi Arabia are willing to cooperate for any action to stabilize the international oil market,” according to the Reuters news agency.
Another source told Reuters that the initiative to cut production came from Venezuela and Algeria, rather than the Saudi kingdom.
There was no immediate comment from Riyadh.
News from Moscow boosts oil prices
Washington described Novak’s statement as showing Russia’s “economic weakness,” after the ex-Soviet country lost billions in oil revenues due to sinking prices.
Oil prices had plummeted from $115 (105 euro) per barrel in mid-2014 to around $27 earlier this month, before gradually rising to $34 per barrel during last two weeks.
Even global heavyweight Saudi Arabia felt the economic pinch, logging in a record budget deficit of some $100 billion.
Oil prices rose significantly on Thursday after Novak’s statements on a possible deal.
Novak changing course
The signal from Moscow appears to be a sharp turn in policy. Only two weeks ago, Novak said Russia was set on keeping its oil production at record levels.
“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.
On Thursday, Novak’s deputy Alexei Texler said that a further drop in oil prices would strain both the oil producers and the state budget.
“The companies would cope with a price of $20 per barrel, in that particular moment, but they would stop considering investments and the future – and that is a large problem. Because nobody can sustain that price,” Texler said.
dj/jr (dpa, Reuters, AFP, Interfax)