MOSCOW: Joint oil production cuts will not be on the agenda when Opec Secretary General Abdullah al-Badri visits Moscow this week to explore deeper co-operation with Russia, the largest oil producer outside the organisation.
Russia will, however, seek closer ties with Opec as it tackles stagnating production at home and a rapid decline in prices that threatens to slash the oil revenues on which its budget depends.
“It’s evident a global recession is approaching and that oil demand will decline. Russia will be among those affected by this decline. It’s in Russia’s interest to reach agreement,” said a leading Russian banker.
Russia needs high oil prices as badly as Opec as it has based its budget calculations on a 2008 oil price of $70 a barrel and, as social spending rises, will need an average price of at least $95 to balance its budget next year.
Oil prices have halved from all-time highs in July, although yesterday US crude settled up $2.40 at $74.25 a barrel, while London Brent crude settled $2.43 higher at $72.03.
Opec will hold an emergency meeting on October 24.
Falling prices have revived the idea of a Russia-Opec pact forgotten in the years of growth that followed previous failed attempts to co-ordinate production cuts earlier in the decade.
The prospect of closer ties could dismay oil consumers, particularly as Moscow’s relations with the West have deteriorated over issues such as the war in Georgia. Opec and Russia together pump about half of the world’s oil.
Badri’s Moscow visit comes a month after a high-level Russian delegation attended Opec’s Vienna meeting. There, influential Deputy Prime Minister Igor Sechin said “broad co-operation with Opec” was a priority for Russia. – Reutersa |
