- Putin Sees ‘Great Chance’ of OPEC Deal as Moscow Ready to Freeze
Russian President Vladimir Putin says he sees no obstacles to OPEC reaching an agreement later this month, and Russia is willing to freeze its crude oil output at current levels as he thinks that oil exporters have overcome major differences in their positions.
“Whether an agreement will be reached, I can not say for one hundred percent, but there is a strong likelihood that it will be achieved,” Putin told reporters on Sunday after he attended the Asia-Pacific Economic Cooperation summit in Lima. “Main contradictions within OPEC if not yet eliminated, they can be eliminated.”
After initial negotiations aimed at freezing production failed in April a preliminary deal was reached in Algiers on Sept. 28., which ended a two-year policy of pumping without limits. Although the OPEC pledge to cut output is still due to be finalized, Russia has already added more than 400 billion rubles ($6 billion) to the nation’s budget, thanks to its talks with OPEC, according to two officials familiar with the government’s calculations.
“There is no difficulty for us to freeze production” at current levels, Putin repeated Russia’s position on Sunday.
The world’s biggest energy exporter is struggling to pull out of its deepest recession in two decades after a slump in oil prices and international sanctions over its annexation of Crimea in 2014. In addition to the OPEC talks, closer ties with the U.S. may also help Russia ease pressure on its economy.
During the campaign, now Presiden-Elect Donald Trump called for an alliance with Russia to fight Islamic State and suggested sanctions imposed against Russia over the Ukrainian crisis could be eased. Putin say he is glad to wait to see whether this pledge comes true.
In a recent phone conversation, Trump confirmed his intention to normalize relations between the U.S. and Russia. “For my part, I did the same,” Putin said. They agreed that their staffers will have a meeting before two leaders will meet in person.
Trump is “actively forming his team”, but he has “no official staffers yet”, Putin said. “We will wait. There is still time”.
In fact Putin doesn’t know yet how his relation with Trump will go. Earlier this month he warned that “it won’t be an easy path” to restoring relations. Meanwhile he has his own domestic challenges and the main one is presidential elections in March 2018.
Recent wave of highly publicized criminal cases against governors, deputy ministers and other officials for alleged corruption, fraud and extortion has been described by analysts as one of key elements of Putin’s agenda for re-election, as Russia is still the most corrupt of major world economies, according to Berlin-based Transparency International.
The latest case has rattled the country’s elite. The Economy Minister Alexei Ulyukayev was arrested on bribery charges linked to purchase of the oil company Bashneft by state-controlled oil giant Rosneft. Putin was quick to remove him from the position in the government.
Although Putin says he can’t comment on Ulyukayev case before law enforcement agencies, judicial system, he said that such actions of law enforcers “only strengthen business climate in Russia” and all should know that “the law will be applied to everyone equally”.
Putin also strongly defended his economic policy and rest of the team.
The “regrettable” detention of Ulyukayev, “has not affected my attitude to government in general,” Putin said, adding that he plans to move forward with the privatization of state assets.
“This sad event can’t influence in any way the acquisition of Bashneft stake by Rosneft”, he said. Russia will not abandon plans to sell Rosneft stake as well.
“This will be a direct privatization of state assets”, Putin said. The government and management will work on selling the state stake in Rosneft, he said.
A Loud Blast Heard in Dhahran, Saudi Arabia’s Largest Crude Oil Production Site
Loud Blast Heard in Dhahran, Saudi Arabia’s Largest Crude Oil Production Site
Two residents from the eastern city of Dhahran, Saudi Arabia, on Sunday said they heard a loud blast, but they are yet to know the cause, according to a Reuters report.
Saudi’s Eastern province is home to the kingdom’s largest crude oil production and export facilities of Saudi Aramco.
A blast in any of the facilities in that region could hurt global oil supplies and bolster oil prices above $70 per barrel in the first half of the year.
One of the residents said the explosion took place around 8:30 pm Saudi time while the other resident claimed the time was around 8:00 pm.
However, Saudi authorities are yet to confirm or respond to the story.
Brent Crude Oil Approaches $70 Per Barrel on Friday
Nigerian Oil Approaches $70 Per Barrel Following OPEC+ Production Cuts Extension
Brent crude oil, against which Nigerian oil is priced, rose to $69 on Friday at 3:55 pm Nigerian time.
Oil price jumped after OPEC and allies, known as OPEC plus, agreed to role-over crude oil production cuts to further reduce global oil supplies and artificially sustain oil price in a move experts said could stoke inflationary pressure.
Brent crude oil rose from $63.86 per barrel on Wednesday to $69 per barrel on Friday as energy investors became more optimistic about the oil outlook.
While certain experts are worried that U.S crude oil production will eventually hurt OPEC strategy once the economy fully opens, few experts are saying production in the world’s largest economy won’t hit pre-pandemic highs.
According to Vicki Hollub, the CEO of Occidental, U.S oil production may not return to pre-pandemic levels given a shift in corporates’ value.
“I do believe that most companies have committed to value growth, rather than production growth,” she said during a CNBC Evolve conversation with Brian Sullivan. “And so I do believe that that’s going to be part of the reason that oil production in the United States does not get back to 13 million barrels a day.”
Hollub believes corporate organisations will focus on optimizing present operations and facilities, rather than seeking growth at all costs. She, however, noted that oil prices rebounded faster than expected, largely due to China, India and United States’ growing consumption.
“The recovery looks more V-shaped than we had originally thought it would be,” she said. Occidental previous projection had oil production recovering to pre-pandemic levels by the middle of 2022. The CEO Now believes demand will return by the end of this year or the first few months of 2022.
“I do believe we’re headed for a much healthier supply and demand environment” she said.
Oil Jumps to $67.70 as OPEC+ Extends Production Cuts
Oil Jumps to $67.70 as OPEC+ Extends Production Cuts
Brent crude oil, against which Nigerian oil is priced, rose to $67.70 per barrel on Thursday following the decision of OPEC and allies, known as OPEC+, to extend production cuts.
OPEC and allies are presently debating whether to restore as much as 1.5 million barrels per day of crude oil in April, according to people with the knowledge of the meeting.
Experts have said OPEC+ continuous production cuts could increase global inflationary pressure with the rising price of could oil. However, Saudi Energy Minister Prince Abdulaziz bin Salman said “I don’t think it will overheat.”
Last year “we suffered alone, we as OPEC+” and now “it’s about being vigilant and being careful,” he said.
Saudi minister added that the additional 1 million barrel-a-day voluntary production cut the kingdom introduced in February was now open-ended. Meaning, OPEC+ will be withholding 7 million barrels a day or 7 percent of global demand from the market– even as fuel consumption recovers in many nations.
Experts have started predicting $75 a barrel by April.
“We expect oil prices to rise toward $70 to $75 a barrel during April,” said Ann-Louise Hittle, vice president of macro oils at consultant Wood Mackenzie Ltd. “The risk is these higher prices will dampen the tentative global recovery. But the Saudi energy minister is adamant OPEC+ must watch for concrete signs of a demand rise before he moves on production.”
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