MOSCOW- As the world’s most powerful oil producers ponder further supply cuts, Russia has little incentive for a radical change as its energy revenue is strong, oil prices are higher than its forecasts and its budget deficit is narrowing.
Ministers from OPEC+, which groups the Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia, meet on Sunday in Vienna.
OPEC+ is set to consider whether to make additional oil supply cuts, three OPEC+ sources told Reuters with prices down by 16 percent since late September as crude output in the US the world’s top producer, held at record highs, while the market was concerned about demand growth, especially from China, the No. 1 importer of oil.
“I don’t see any reasons to change something radically,” a source close to the Russian government said on condition of anonymity about the forthcoming OPEC+ meeting.
The source added that there was still a chance for surprises at the face-to-face meeting.
Saudi Arabia, Russia and other members of OPEC+ have already pledged oil output cuts of 5.16 million barrels per day, or about 5 percent of daily global demand, in a series of steps that started in late 2022.
President Vladimir Putin says Russia has not simply survived but has prospered despite the West’s imposition of the most stringent sanctions ever imposed on a major economy, including a cap on the price of Russian oil at $60 per barrel.
After a contraction in 2022, Russia’s economy is forecast to grow by around 3 percent this year, faster than either the United States or the Euro zone, according to Russian forecasts.
Robust global oil prices this year and Moscow’s growing use of a shadow tanker fleet have meant that much Russian oil has traded mostly above the Western oil cap price.
Moscow-based independent oil analyst Alexei Kokin said the oil prices declined from “very comfortable” levels to “just comfortable” levels.
“That’s why, it looks like there is no special need for a move (for Russia). To leave the production restrictions as they are is an acceptable option,” he said.
Russia has budgeted the price of Urals, its flagship oil grade, at 4,788 roubles ($53.36) per barrel this year.
The Urals price on Friday fell below the Western price cap level of $60 per barrel amid a rise in freight rates fueled by fresh US sanctions on shipowners and weaker global oil prices. – Reuters
