Crucial week for oil talks

Russia’s oil output in November fell from near-record levels as president Vladimir Putin prepares to meet Saudi crown prince Mohammed bin Salman ahead of crucial Organisation of Petroleum Exporting Countries (OPEC) talks in Vienna.Russian oil companies have pumped 40 000 barrels a day less than in October, when they set a post-Soviet record of more than 11.4 million barrels a day, the country’s energy minister Alexander Novak told Bloomberg Wednesday in Moscow. The country has seemed reluctant to commit to further supply cuts and will discuss the matter with its OPEC allies this week.With Brent plunging more than 30% since early October, Saudi Arabia has suggested coordinated production cuts from the OPEC and its allies. Most analysts and traders expect that will be agreed this week, but Russia’s participation is less certain. Talks between Putin and Bin Salman on the sidelines of the G-20 meeting in Argentina could bring the two oil powerhouses closer together.If Russian companies keep pumping at current levels for the remainder of November, it’ll be the first monthly drop in production since January. The reduction, however, is not necessarily a signal that Russia is ready to return to sustained output cuts.“The decline seems driven by seasonality, maybe some other factors at individual fields rather than intentional steps to cut oil output ahead of the OPEC+ talks,” Raiffeisen Centrobank analyst Andrey Polischuk said. “Russia wouldn’t want to lose extra revenue until there is a clear decision among OPEC+ countries.”Complicating matters for the Saudis is US president Donald Trump’s repeated calls for lower oil prices after the White House supported Bin Salman following the murder of Jamal Khashoggi. The kingdom was last week said to be producing at record levels above 11 million barrels a day.Four-month dealRussia and Saudi Arabia struck a deal to raise oil output from September through December to cool rising prices, the Reuters news agency reports.Sources familiar with the plan were quoted as saying on October 3 that the Russian and Saudi energy ministers reached the agreement during a series of meetings last month.The United States withdrew from the 2015 nuclear deal between Iran and world powers in May, and last month started re-imposing sanctions on the Iranian economy that were lifted under the deal in exchange for curbs on Tehran's nuclear programme.A second round of penalties targeting Iran's oil exports came into effect in early November.The US administration had pressured other countries to cut their Iranian crude imports and called on the OPEC to boost output to bring down fuel prices.AlgiersBut at a meeting in Algiers in October, OPEC members and other global producers, including Russia, declined to announce an immediate increase in production, a move opposed by Iran.The Russian and Saudi energy ministers, Aleksandr Novak and Khalid al-Falih, "agreed to add barrels to the market quietly with a view not to look like they are acting on [US President Donald] Trump's order to pump more," an unidentified source told Reuters at the time.Russian output rose 150 000 barrels per day (bpd) to 11.36 million bpd in September."I would expect Russia's oil production will hover at around 11.4 million to 11.6 million bpd until the end of 2018 and may increase further to 11.8 million bpd later on in 2019," a source at a major Russian oil company said.On 3 October, president Vladimir Putin said at Moscow's Russian Energy Week that Russia "will be quite satisfied" with oil prices of US$65 to US$75 a barrel.He also said that his country, which already broke its post-Soviet production record last month, could raise production by up to 300 000 bpd to tackle possible fuel shortages.Falih told the forum that Saudi production was "below 10 million barrels a day for the first five months of the year; in October we're producing about 10.7 million.""I anticipate that November will be slightly higher," he said.Meanwhile, Iran accused Saudi Arabia and Russia of breaking OPEC's agreement on output cuts, and insisted that they could not produce enough oil to make up for a reduction in Iranian exports. – Nampa/Reuters/Bloomberg

Crucial week for oil talks

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Namibian Sun 2024-11-25

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Crucial week for oil talks

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Namibian Sun 2024-11-25

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