ISTANBUL: President Vladimir Putin on Monday said non-OPEC member Russia was ready to work with the cartel in imposing measures to limit oil production, in comments that propelled the price of crude to its highest levels in a a year.
Eyes have turned to Russia, the world’s top oil producer alongside Saudi Arabia, to see if it will join in a concerted effort alongside cartel members to prop up prices after OPEC last month agreed a surprise output cut in the hope of lifting rock-bottom prices.
Putin said at the World Energy Congress in Istanbul that such coordinated output curbs were the only way to balance the market after a prolonged period of low prices.
In response, Brent North Sea crude rose $1.53 to $53.45 a barrel, the highest level reached since October 2015.
“In the current situation, we believe a freeze or a cutting of the production of oil is the only way preserve the stability of the energy sector and accelerate a rebalancing of the market,” Putin said.
“Russia is prepared to join joint measures limiting production and calls on other exporting countries to do the same,” he added.
He expressed hope this would lead to a concrete agreement at a November OPEC meeting and that this idea would be a “positive signal to the market and investors.”
Russian Energy Minister Alexander Novak is expected to attend an informal meeting of OPEC energy ministers in Istanbul on Wednesday in a sign of increasingly tight cooperation with OPEC.
The period of low oil prices has been hugely damaging to economies like Russia which has failed over the last years to reduce its dependence on hydrocarbon exports for revenues.
Putin raised alarm that if the current trend of low prices continued, it could lead to a “chronic” lack of financing in the sector which could in turn lead to unpredictable flare-ups in prices.
“Russia as prominent energy power will always make its contribution to stable development,” he said, insisting that even in the current difficult times Russia was still investing in oil extraction.
Putin is making his first trip to Turkey following a crisis sparked by the shooting down of a Russian war plane over the Syrian border last November. He will later hold talks with President Recep Tayyip Erdogan.
Oil has for months pressured by concerns of slack demand amid a global economic slowdown at a time of a glut in supply in particular in the US.
Nicolas Maduro, president of Venezuela, said at the World Energy Congress that a “new mechanism” was needed to keep up prices.
“We need a new mechanism. The oil world needs realistic and fair prices .... for investment we need fair prices.”
Maduro had earlier held bilateral talks with President Recep Tayyip Erdogan in Istanbul.
“Prices are not sustainable anymore and have fallen to their lowest levels for the last 40 years,” Maduro said.
“We see they are even below production costs.”
Referring to the upcoming OPEC talks, he also expressed hope that “the energy ministers can reach an agreement and through this agreement we hope there can be an alliance among producers.”
Maduro said an informal meeting of OPEC members that was also expected to include Russia could be a first step toward creating a new alliance.
The price of crude has recovered in the last days but the recent period of low oil prices has been deeply hurtful for producers like Venezuela who are heavily dependent on crude exports.
Russia ready to join OPEC crude production curbs
Russia ready to join OPEC crude production curbs
