Russia is ready to cooperate with its OPEC+ partners to support the world oil market, even though it’s comfortable with current crude prices, President Vladimir Putin said. The OPEC+ mechanism “has already established itself as an effective tool in ensuring long-term stability in global energy markets,” Putin told a meeting with ministers in Moscow on Sunday. The fact that Russia has large financial reserves to cushion the impact of turbulence in the market “doesn’t eliminate the need for action, including in cooperation with our foreign partners,” he said.
Putin commented ahead of the March 5-6 OPEC+ meeting in Vienna where Saudi Arabia is pushing for swift production cuts to compensate for the drop in oil demand due to coronavirus. Russia, the most important non-OPEC partner in the producers’ coalition, has so far rebuffed those entreaties, underscoring the dominant role that Putin has played since forging an alliance with the Saudis three years ago.
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Current oil prices are “acceptable” for the Russian budget and economy, though “it is difficult to predict how long-term the trend will be,” the president said, adding that he intended to meet later Sunday with Russian oil producers. Brent futures swung between gains and losses around $50 a barrel in early Asian trade on Monday. Front-month prices collapsed by 13.6% last week.
The past week was the worst for the oil market since the 2008 financial crash and “we need to be prepared for a variety of scenarios,” Putin said.
The spread of the virus — and governments’ efforts to contain it — has raised questions about whether the OPEC meeting would take place in the usual format in Vienna, particularly after a major energy conference in Houston, known as CERAWeek, was canceled. OPEC delegates insisted on Sunday their meeting would go ahead as planned, but some said privately that there were ongoing discussions about how to proceed. The cartel’s members include Iran — one of the countries hardest hit by the virus so far.
