Russia is interested in maintaining the parameters of the June OPEC+ agreement – sources

MOSCOW, May 26 (Reuters) – Russia is keen to maintain the parameters of the OPEC+ deal at the alliance’s June meeting as it will find it difficult to introduce further output cuts and a price rise above the price cap will threaten exports, two sources told Reuters.

Russian President Vladimir Putin said this week that energy prices are approaching economically viable levels. Russian Ural species since the beginning of May, it has been trading in the range of USD 53-57 per barrel, i.e. below the ceiling of USD 60 per barrel set by the West.

In the event of a reduction in oil supply on the world market, Russia will not easily take advantage of the subsequent price increase: a stronger reference grade could drive the price of the Russian brand Urals above the price cap, deterring some new buyers in Asia, where Moscow expects to divert 140 million tons of crude oil and petroleum products and creating additional difficulties in attracting tanker tonnage.

“Russia is between a rock and a hard place and would definitely like higher prices and higher incomes. Moscow does not want prices to rise too high as this could trigger another round of price cap controls. As such, Moscow will try to take a more cautious path,” Victor Katona, a Kpler analyst, told Reuters.

At the same time, a further decline in production and exports will bring direct and indirect losses to both enterprises and the budget of the Russian Federation.

“It is unlikely that there will be further cuts in oil production,” said a source familiar with the Russian position.

On Thursday, Deputy Prime Minister Alexander Nowak said that Russia and OPEC+ partners will determine what’s best for the market at a meeting on June 4, although Novak had previously suggested in a television interview that the alliance partners would be unlikely to make changes to the global deal at 12:00 p.m. upcoming meeting. .

In April, Novak said that an additional output cap under the deal is not needed yet as the global oil market has reached equilibrium, taking into account the reduction of global oil production by OPEC+ countries, as well as seasonal consumption demand.

“Russia is barely keeping up with the promised production cuts and does not need additional cuts in the current market conditions,” a source at the Russian oil company said.

Nowak said last week that the Russian Federation, which has completely shut down the publication of production statistics, reached the required level of production cuts under the global pact in May – 0.5 million barrels per day.

According to the International Energy Agency (IEA), Moscow cut oil production in April by 0.2 million barrels a day, producing 9.6 million barrels a day.

From March to the end of the year, the Russian Federation committed to voluntarily reduce oil production by 0.5 million barrels per day compared to February levels – by about 10 million barrels per day.


The Saudis, Russia’s main partners in the deal, are sending the opposite signal: earlier this week, Saudi Energy Minister Prince Abdulaziz bin Salman warned speculators that a short-circuit could “harm them” and advised them to be careful ahead of the OPEC+ meeting.

Contradictory signals from the Russian Federation and Saudi Arabia do not allow us to clearly predict the further fate of the OPEC+ agreement, says analyst Igor Galaktionov from BCS Mir Investments.

“In my opinion, OPEC+ as a whole will stick to the status quo, but Saudi Arabia itself may announce small cuts if it sees it as effective,” Galaktionov said.

In April, the countries of the OPEC+ alliance, including Russia and Saudi Arabia, fighting the surplus of raw materials, announced a reduction in oil production from May to the end of the year by about 1.7 million barrels a day, compared to the 2 million barrels a day agreed in the fall.

“Given the fact that the market may perceive cuts as confirmation of negative demand forecasts, it seems more profitable to do nothing for now,” Galaktionov added. (Olesya Astakhova, Gleb Gorodyankin, Vladimir Soldatkin)


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