OPEC, Russia becoming unlikely allies
The slump in oil prices is leading to an unlikely convergence of interests between Russia and OPEC which have traditionally seen each other as rivals.
Russia will meet with OPEC on June 2-3 to discuss production adjustments in order to arrest falling oil prices, Energy Minister Alexander Novak said in Moscow.
The meeting will be held before the Organization of the Petroleum Exporting Countries gathers in Vienna on June 5 to discuss the global market.
According to Russian officials, the country is on course to lose $180 billion this year from slump in oil prices.
Russia is the world’s biggest energy exporter but its tribulations have been compounded by Western sanctions over the Ukraine conflict.
Excess oil in the market coupled with the global economy slowdown has sent crude prices crashing into almost half their level of 10 months ago.
“Oil price has fallen from $100 to about $50 per barrel. This would result in a decrease in Russian export revenues of $180 billion a year,” Maxim Oreshkin, an official at the Russian finance ministry, has said.
OPEC left its output target at 30 million barrels per day intact at its last meeting, saying non-member producers created an oversupply and must help tackle it.
Novak met with his counterparts from Saudi Arabia, Mexico, and Venezuela before OPEC’s last gathering in November.
The Saudi kingdom is an avid opponent of production cuts in OPEC, prompting Russian oil producers to charge that the group “has lost its teeth” under the decision and led to market destabilization.
Russia’s rebuttal of OPEC’s demands for cooperation on output levels in the past also riles their chequered history of relations.
But there are growing signs to believe that the two sides are headed toward their first marriage of convenience in years.
Coordination is already building up, with Russia having popped the question for an observer status in OPEC, according to head of Russia’s state-owned oil company Roseneft Igor Sechin.
Other officials have said Russia was engaged in “unprecedentedly active” consultations with OPEC members, including Saudi Arabia.