Russia to look to OPEC production cuts to manipulate the price of oil

Bloomberg/Fuel Fix:
Russia’s government is considering joining OPEC production cuts next year to boost oil prices, Kommersant reported. There isn’t consensus to proceed with the measure, it said.

The world’s biggest crude oil producer may agree to reduce output by 15 million tons, or about 300,000 barrels a day, in return for 70 million tons of OPEC reductions, the Moscow-based newspaper reported, citing people close to the government that it didn’t identify. Russia’s 2015 output estimates will be available later this year, Olga Golant, a spokeswoman for the Energy Ministry, said in response to questions from Bloomberg News. She declined to comment on the possibility of cuts.

Russian government officials held talks with Saudi Arabia, OPEC’s largest member, and Venezuela last week to discuss oil prices that have plunged into a bear market amid the highest U.S. production in three decades. Saudi Arabia agreed on Nov. 21 to cooperate with the government in Moscow over oil markets, without making a public commitment to limit output.

“Russia might agree to cut output if OPEC reduces production by 1.5 million barrels a day,” Olivier Jakob, managing director of Zug, Switzerland-based consultant Petromatrix GmbH, said by e-mail today. The government may struggle to get companies producing oil in Russia to participate in reductions, he said.
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This would benefit US producers who could use the higher price to increase production in marginal wells.  With the new US shale production, OPEC has lost the monopoly it needed to control pricing.  If the US announced that it was opening up ANWR and offshore sights for drilling it would probably mean OPEC would mainly be reducing market share.  The question is whether this administration is in so tight with the anti energy left that it will side with the despots and the cartel.

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