Russian President Vladimir Putin said that no serious issues are blocking an OPEC production proposal. He added that Russia is ready to do its part by freezing oil production at its current levels.
According to UPI, Putin said the following at an economic summit in Peru: “We have spoken on this matter before and have stated that we are ready to freeze production at today’s level” and “We do not think that would create any problems for our energy sector.”
Economists from the Organization of Petroleum Exporting Countries estimate that Russia is currently at or near all-time record output. UPI further reports that this year’s oil production exceeds last year’s rate by about 1.8 percent, standing at 11 million barrels per day.
OPEC members are looking to put a ceiling on production as crude oil prices dropped below $30 per barrel earlier this year. The price decline was stimulated by oversupply, especially from large producers like Russia and the United States. The cap on output aims to achieve a more balanced relationship between supply and demand in the global markets, therefore increasing prices per barrel.
There seems to be a shared understanding between the countries involved, with Russian Energy Minister Alexander Novak saying that talks around coordinating an agreement were constructive. This statement came from an energy forum held in Qatar last week.
“I cannot say for certain whether they will reach an agreement or not, but I do think it highly probable that they will,” Putin stated. “As far as we understand the situation, there are no serious issues remaining.” The final decision on the matter will be made on November 30 during an official OPEC meeting, Russian agency Pravda says.
Most analysts agree, however, that the official communication from Russia does not correspond to the actual market situation. With production ceilings proposed by OPEC below what the current output is for the 14 member states, it seems like cuts would be necessary.
Russia’s apparent willingness to freeze production, along with OPEC’s renewed push at reaching an agreement caused oil futures to settle at a three-week high on Monday. MarketWatch reports similar price increases in December West Texas Intermediate crude and January Brent crude.
Iran’s oil minister Bijan Zangeneh also stated that OPEC is “highly likely” to reach a consensus around oil production later this month.
Iraq’s involvement in the agreement has caused issues due to the country’s increasing production over the last few years. The war against Islamic State has made the demand for oil revenue very pronounced, the government says.
Differences between the OPEC member states remain, with the organization continually failing to implement production cuts since the price tumbled two years ago. Non-OPEC countries, including the U.S. and Russia, also contributed to low prices.
In addition, Donald Trump’s presidency is expected to bring looser regulations, potentially increasing U.S. output of oil and gas. His statements about Iranian sanctions and banning Saudi crude imports further support that possibility.