Install

Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

OPEC Heads Arrive to Persuade Russia

Russia promised a decision Sunday on extending its current oil export curbs into the second quarter, as OPEC chiefs arrived to convince Moscow to help the oil cartel bolster flagging world crude prices.

Russia has come under heavy pressure from OPEC to keep exports down and help boost flagging prices, but faces demands at home to ease the curbs to release a growing flood of oil onto the domestic market.

"The result [of the meeting with OPEC officials Monday] will be a declaration by the government on our position [on whether to extend the export cut]," Energy Minister Igor Yusufov told reporters.

Crude prices have recovered by 20 percent since last year when a stand-off between OPEC and Moscow drove benchmark North Sea Brent crude below $17 per barrel, but the cartel is pushing for non-OPEC members to extend the cut beyond the first quarter.

"We are hopeful," OPEC Secretary-General Ali Rodriguez told reporters on arrival in Moscow when asked about the prospects for continued curbs on exports into the second quarter.

"We have common goals, and common problems, with Russia. And we have to continue our dialogue to strengthen our cooperation.

"Russia's role in the international oil markets is clearly very important," added Rodriguez, who arrived with the cartel's president, Rilwanu Lukman.

Rodriguez was also upbeat about prospects for crude prices.

"Certainly oil prices will be increasing in the second half [of the year]," he said.

The OPEC official said Friday the cartel might maintain export curbs for the rest of the year, and expressed confidence at reaching an agreement with Russia.

The second quarter was key to maintaining price stability, he said, referring to the fact that demand normally drops after the winter peak.

A key subject for Monday's discussions between the OPEC team, Yusufov and Prime Minister Mikhail Kasyanov will be a "fair" oil price corridor.

Yusufov reiterated that Russia wanted oil prices to be in the range of $20-$25 per barrel, and that Russia would meet fellow non-OPEC producers Mexico and Norway before March 15, when OPEC is due to hold its next ministerial meeting.

Russia, the world's second-largest oil exporter, is one of five independent producers that pledged late last year to cooperate with OPEC to curb oil supplies to prevent prices crashing during the global economic downturn.

Russia agreed to cut its exports by around 5 percent, or 150,000 barrels per day, while the cartel pledged to reduce its shipments by 1.5 million bpd.

But Kasyanov has pointed out Russia has no formal agreement with OPEC, while Finance Minister Alexei Kudrin said the state could not push the mostly private oil sector to cut production.

The OPEC visit started after Russia said Friday it had kept a lid on crude exports in February, with supplies below last year's record, but amid concerns that rising oil output would soon find no other ways than to flow abroad.

Analysts said Russia could simply promise OPEC not to declare a formal end to the cut, thus protecting the very fragile cooperation on quotas between OPEC and non-OPEC members.

Russia's decision to cut back exports in the first quarter was reached after much diplomatic pressure from OPEC, although the cartel is expected to adopt a more softly-softly approach this time.

Other OPEC states Algeria and Venezuela are to send their energy ministers to Moscow the week after Rodriguez's visit.

Yusufov said Russia was "ready to continue the dialogue with all market participants, including OPEC, non-OPEC and Western consumers."