July 25, 2024

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Russia Can Reduce Its Oil Output by 10% if the U.S. Joins Cuts

(Bloomberg) — Russia would target a 1 million barrel-a-day cut in any new deal with other key oil producers, on condition the U.S. joins cuts, according to four people familiar with the sentiment in the industry.

The country’s President Vladimir Putin, who said that a reduction in global oil production of about 10 million barrels a days is possible and the nation is ready to participate in this “on a partnership” basis, won’t agree for Russia to take more than one-tenth of the global cuts, according to one of the people, who spoke on condition of anonymity because the matter isn’t yet public.

The idea to decrease global production by 10 million barrels a day, in response to the shrinking demand amid the coronavirus outbreak, was initially announced by the U.S. President Donald Trump earlier this week and then echoed by Putin at the meeting with Russian biggest oil producers and government officials.

The ministry’s press service did not respond to a request for a comment.

Russia’s cuts of roughly 1 million barrels per day would represent some 10% of the nation’s daily average output that reached 11.294 million barrels in March. The wider coalition of oil producers may demand more, in which case Russia may consider a cut of 1.5 million barrels per day, though the Kremlin may not like such a scenario, the other person said.

The OPEC+ meeting to try to end the oil price war is unlikely to go ahead on Monday as previously expected, as Riyadh and Moscow engaged on a war of words about who’s to blame for the collapse in oil prices.

The OPEC+ alliance needs more time for negotiations, a delegate familiar with the matter said, noting the meeting may still happen a few days later.

Yet any potential deal is already at risk following Trump’s meeting with U.S. oil industry executives Friday, in which he didn’t make any public declaration of a plan to curtail domestic output, saying that it’s a free market and up to Saudi Arabia and Russia to solve their price war.

The two de-facto OPEC+ leaders and architects of the previous pacts to reduce production signaled they are still far from reaching a new agreement. On Saturday, Saudi Arabia denied Putin’s comments claiming that the kingdom withdrew from the OPEC+ agreement.

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