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

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