- Putin did not rule out changing the plans to increase production.
- Brent crude oil futures rose 70 cents on Thursday to $42.42 per barrel
- US crude oil futures closed up 61 cents at 40.64 US dollars a barrel, an increase of 1.52%.
Russian President Vladimir Putin said on Thursday that Russia does not rule out the possibility of delays in OPEC+ production plans. This latest sign indicates that OPEC may limit crude oil production for a longer period of time as the epidemic once again affects demand.
Putin did not rule out changing the plans to increase production. Brent crude oil futures rose 70 cents on Thursday, to $42.42 per barrel. US crude oil futures closed up 61 cents at 40.64 US dollars a barrel, an increase of 1.52%. Two main crude oil contract on Wednesday fell more than 3 percent, the most in three weeks.
OPEC+ was originally scheduled to lower its production cuts from January next year, but the organization hinted that it might adjust its plans in the event of a decline in demand. Putin had previously tended to keep the plan unchanged.
To support the sluggish oil market , OPEC+ is cutting its total output by 7.7 million barrels per day. OPEC+ originally planned to relax production cuts in January, easing production cuts by 2 million barrels per day.
OPEC and its allies have recently issued warnings about the unstable prospects, and more and more traders have suggested that the market cannot absorb the additional oil supply.
Putin’s latest remarks are the latest manifestations of solidarity between Russia and Saudi Arabia. The leaders of the two countries have been engaged in intensive telephone diplomacy this month.
After Saudi Crown Prince Mohammed Bin Salman and Putin made two phone calls within a week, the two oil ministers stood on the united front at the OPEC+ Joint Ministerial Oversight Committee (JMMC) meeting.
Prince Abdulaziz, Saudi Energy Minister, said “no one in the market should doubt our promises and intentions. We must be able to take measures to stop negative trends.”
OPEC+ ministers will debate whether to maintain or adjust the production reduction plan at the meeting from November 30 to December 1. In July, OPEC postponed the implementation of its production increase plan for one month due to doubts about the prospects for oil demand.
Putin said that OPEC is a complex and effective mechanism to stabilize the global oil market.
“We believe there is no need to change anything in our agreements, we will closely watch how the market is recovering. Consumption is on the rise.”
“However, we do not rule out that we could keep existing restrictions on production, and not remove them as quickly as we had planned to do earlier,” Putin told a meeting of the Valdai Discussion Club.
“If need be, maybe, we can take other decisions on further reductions. But we don’t see such a necessity now,” he added.
A few hours before Putin’s speech, Rosneft’s CEO Igor Sechin acknowledged that interaction between energy producing countries is necessary and called for action to stabilize the oil market.
Although OPEC+ is not mentioned, Sechin said that the world economy and oil demand may begin to recover next year, but “humanity needs to take coordinated actions to achieve this result.”
Russian oil companies have been cutting crude oil output in accordance with the coalition agreement. In the past two months, Russia’s overall compliance rate with the OPEC+ agreement was 96%.
World Bank on Thursday, said that the new coronavirus epidemic may have a lasting impact on oil demand . Air travel may be permanently reduced, as remote meetings lead to reduced business travel and lower demand for aviation fuel.