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. Last Updated: 07/27/2016

Khristenko: No Plans to End Oil Curb

Russia has no immediate plans to end a voluntary curb on its oil exports despite a tempting hike in world oil prices caused by Iraq's halt in crude exports, but it may change its mind in mid-May, a senior Cabinet official said Tuesday.

Deputy Prime Minister Viktor Khristenko said the price surge, caused by Iraq's move aimed at showing support for the Palestinians in their conflict with Israel, could be short-lived. He said that Russia, the world's second-largest oil producer behind Saudi Arabia, should stick to the export restrictions for now.

"The prices are currently high, but factors that determine them can hardly be called stable and long-term," Khristenko said, Itar-Tass and Interfax reported. "It is erroneous and premature to draw instant conclusions."

Russia's aggressive young oil companies are impatient to shed the export restrictions imposed under pressure from the Organization of the Petroleum Exporting Countries, because oil export prices significantly exceed Russian domestic prices. Domestic refineries are currently paying $4.50 per barrel while foreign lifters are paying $23 per barrel.

Khristenko said Russia would stick to its earlier approved exports regime for the second quarter while closely following the market situation.

In mid-May, the Cabinet "will sum up the intermediate results of monitoring and come up with possible additional decisions on that basis," Khristenko said on a trip to Kazakhstan.

The Foreign Ministry issued a statement Tuesday saying that "Moscow is pondering possible consequences of the Iraqi leadership's decision to suspend oil exports for one month," and expressing concern over anything that exacerbates the situation in the Middle East.

Alarmed by decreasing world prices for oil, OPEC and the world's other major oil exporters, Russia, Norway, Mexico and Angola, have agreed to keep just under 2 million barrels per day off world markets until the end of June, although the non-OPEC producers have reserved the right to abandon the deal earlier.

Under the deal, Russia is supposed to cut its crude exports through national pipelines by 150,000 bpd from the levels of the third quarter of 2001.

President Vladimir Putin met Tuesday with Semyon Vainshtok, president of the Transneft pipeline company, to discuss the latest efforts to modernize the pipeline network. A terse Kremlin statement about the meeting did not mention export restrictions.

The main losers from Iraq's decision Monday appear to be Russian oil companies, who buy a large amount of Iraqi crude under the United Nations' oil-for-food program. Russia, Iraq's top trade partner and its closest ally on the United Nations Security Council, has long backed Baghdad's demand to lift the UN sanctions.