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According to Reuters, Russian oil company C Sechin (c) said on Tuesday (May 1) that although Russia may reach an oil agreement with OPEC, R will not cut oil production. Sechin's remarks highlight that if Russia and OPEC reach an agreement to support oil prices, it will be difficult for Russia to get domestic oil companies to freeze or even reduce production.
According to preliminary data from the Russian Ministry of Energy compiled by Bloomberg, Russia’s crude oil and condensate production is expected to reach 10,000 barrels per day in March, an increase of 10,000 barrels per day compared with last month, and is set to hit the highest record since mid-year. It is reported that Russian oil giants R and Russia will launch multiple new oil field projects in recent months.
Russian President Vladimir Putin said on Monday (May 2) that Russia was ready to reach an agreement with OPEC, but did not provide any details. Today (January) Russian Energy Minister Novak met with the Saudi delegation in Istanbul. He said that he is not currently considering cutting crude oil production and is only considering the option of freezing production.
Russia's Lukoil said it is optimistic about reaching an agreement to limit crude oil production and will cut oil production if political needs arise. Russia may agree to reach a production limit agreement with OPEC to maintain crude oil production at 2016 levels. The global oil price needs to be at US$/barrel for long-term investment, and the oil price at US$/barrel is the "gold price".
But Sechin’s attitude is completely opposite. Sechin has always been in opposition to OPEC. Petroleum Company R's oil production accounts for 10% of Russia's total. Its annual oil production exceeds 100 million tons, which is approximately 10,000 barrels per day. When a Reuters reporter asked Sechin whether he would cut production, Sechin said:
&Why should we do that? The company plans to increase oil production this year. Sechin said he doubted whether OPEC countries such as Iran, Saudi Arabia and Venezuela would similarly cut production. As Iraq increases its northern oil exports and Libya reopens its main oil terminals, OPEC's oil production may reach a record high in March.
In addition, Sechin has long believed that joint actions by OPEC and non-OPEC countries will help U.S. high-cost shale oil producers resume production. When oil prices reach the dollar, shale oil can become profitable, and the dollar will lead to more shale oil production.
Several attempts by Russia and OPEC to join forces to stabilize the oil market have failed in the past. Russia's oil industry has claimed for years that it had no way to cut production to support falling oil prices due to technical reasons caused by Siberia's climate. In fact, Russia can do it - as long as its political will is strong enough. In theory, Putin could force oil companies to cut production or delay the launch of new oil field projects.
At present, it seems that Russia’s willingness to participate in the production freeze is very strong. Russian Energy Minister Novak said on the evening of Tuesday (July 2) that the current situation in the crude oil market is different from the "previous crisis". The current crisis has lasted too long and investment has declined for three consecutive years. Russia has been preparing to join the production freeze since April. It is necessary for OPEC and non-OPEC oil-producing countries to discuss the oil market. Russia supports OPEC's decision and is waiting for specific details.
An informal meeting between OPEC and non-OPEC will be held tomorrow (January). The well-known financial website Zero Hedge stated that the market has mixed reactions. Although OPEC reached an agreement to limit production in Algiers, the monthly report showed that OPEC increased monthly production by 10,000 barrels per day to a record high. Iraq believed that its own production had been miscalculated and the agreement was unfair to it. Iraq, Saudi Arabia, and Iran stated that they would not participate in the meeting tomorrow.
OPEC Secretary-General Barkindo said that the OPEC production limit agreement reached in Algiers applies to all member countries, and all oil-producing countries are reaching a global consensus. OPEC is working together for the Algiers Agreement. OPEC must cooperate with other oil-producing countries to resolve excess inventory. Only when inventories fall can balanced crude oil prices be achieved.
Oil prices once hit a one-year high on Tuesday (May 1). As of March 1, Beijing time, crude oil was trading at .USD/barrel and Brent oil was trading at .USD/barrel.
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