Putin says Rus­sia ready to join oil out­put curbs, prices surge

The Sun (Malaysia) - - SUNBIZ -

LON­DON: Brent North Sea crude rose to US$53.45 (RM222) a bar­rel yes­ter­day – its high­est price in a year – af­ter Pres­i­dent Vladimir Putin in­di­cated Rus­sia was ready to join mea­sures to limit global oil pro­duc­tion.

At around 1453 GMT, the price hit US$53.45, the high­est level reached since Oc­to­ber 2015, when it was at US$54.05 a bar­rel.

The price of a bar­rel of West Texas In­ter­me­di­ate, the US bench­mark crude, rose to US$51.46, its high­est level since June.

“In the cur­rent sit­u­a­tion, we be­lieve a freeze or a cut­ting of the pro­duc­tion of oil is the only way pre­serve the sta­bil­ity of the en­ergy sec­tor and ac­cel­er­ate a re­bal­anc­ing of the mar­ket,” Putin said at the World En­ergy Congress in Istanbul.

“Rus­sia is pre­pared to join joint mea­sures lim­it­ing pro­duc­tion and calls on other ex­port­ing coun­tries to do the same,” he added.

The Or­gan­i­sa­tion of Pe­tro­leum Ex­port­ing Coun­tries (Opec), of which Rus­sia is not a mem­ber, agreed two weeks ago to limit their pro­duc­tion and thereby limit the over­ca­pac­ity that has brought down global oil prices.

Putin said that he hoped that Opec mem­bers would con­firm the de­ci­sion to adopt quo­tas for out­put when the or­gan­i­sa­tion meets in Novem­ber.

Rus­sian oil out­put jumped by al­most 4% in Septem­ber from the pre­vi­ous month to 11.11 mil­lion bar­rels per day, a new post-Soviet record-high, as com­pa­nies ramped up drilling amid im­proved oil prices.

Putin did not say at what level Rus­sia would be ready to cap its pro­duc­tion.

Rus­sian En­ergy Min­is­ter Alexan­der No­vak is ex­pected to at­tend an in­for­mal meet­ing of Opec en­ergy min­is­ters in Istanbul to­mor­row.

“Putin’s com­ments have taken the mar­ket by a bit of a sur­prise,” said Fawad Raza­qzada, an an­a­lyst at Forex.com.

“Ma­jor oil pro­duc­ing na­tions like Rus­sia know how pun­ish­ing the mar­kets can be, so they may well re­duce sup­ply this time around be­cause fail­ure to do so would be dis­as­trous,” he said.

Naeem As­lam, re­search di­rec­tor at ThinkMar­kets, said Putin’s com­ments had “re­moved the un­cer­tainty”.

But he warned: “If his­tory tells us any­thing, it is this that these ma­jor oil play­ers also have a habit of not re­spect­ing the agreed agree­ment. But for now traders are lov­ing the news and we are see­ing the price mov­ing higher,” he said.

The pe­riod of low oil prices has been hugely dam­ag­ing to economies like Rus­sia which has failed over the last years to re­duce its de­pen­dence on hy­dro­car­bon ex­ports for rev­enues. – AFP, Reuters

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