Russia to make call on oil output cuts ‘in coming days’

Russia said yesterday it will decide within days whether to back oil output reductions with its OPEC partners to counter crude price falls since the deadly spread of a coronavirus. Energy Minister Alexander Novak’s announcement came a day after Russia rejected proposals to slash crude output at an OPEC+ meeting, media reported, and asked instead for more time to assess the virus’ impact on the world economy and demand for crude.

OPEC+ groups together the Organisation of the Petroleum Exporting Countries with Russia and other non-members. They already have a production cut agreement in place, but Saudi Arabia and others have called for additional rapid cuts to support the oil price which stands close to 20 percent lower than a month ago.

“We’ll see how the situation evolves over coming days,” Novak told Russian news agencies Friday. “The matter will be resolved in the coming days.” The spread of the novel coronavirus in and from China has sparked worries that Chinese economic growth will suffer, in turn impacting world growth and with it demand for oil.

China buys two thirds of its crude from OPEC and its allies, mostly from Saudi and Russia. Russia, whose finances are fragile, fears that production cuts will hurt its income too much, according analysts.

The country has embarked on a gigantic public investment plan to rekindle economic growth and meet President Vladimir Putin’s targets by 2024 when his mandate ends. The programme depends heavily on steady income from crude sales.