MOSCOW, Dec 9 (Reuters) – Russia, the world’s biggest exporter of energy, could cut oil production and will refuse to sell oil to any country that imposes the West’s “stupid” price cap on Russian oil, President Vladimir Putin said on Friday. The Group of Seven major powers, the European Union and Australia last week agreed to a $60 per barrel price cap on Russian seaborne crude oil after EU members overcame resistance from Poland. “As for our reaction, I have already said that we simply will not sell to those countries that make such decisions,” Putin told reporters in the Kyrgyz capital, Bishkek. “We will think, maybe, even about a possible, if necessary … reduction in production.” Putin, who rules the world’s second largest oil exporter after Saudi Arabia and the largest gas exporter, said Russia had a production agreement with other members of the OPEC+ oil producers’ club, so such a drastic step was still only a possibility. “We are thinking about this, there are no solutions yet. And concrete steps will be outlined in a decree from the president of Russia that will be released in the next few days,” Putin said. Selling oil and gas to Europe has been one of the main sources of Russia’sforeign currency earnings since Soviet geologists found oil and gas in the swamps of Siberia in the decades after World War Two. White House spokesman John Kirby said Putin’s threat was not unexpected but that it remains to be seen what action Moscow ultimately takes, telling reporters in a news briefing: “We’re not surprised by those comments. It’s actually not really new.” Putin dismissed the West’s attempt to squeeze Russian finances, saying the $60 price cap corresponded to the price at which Russia was selling oil. “It all boils down to about this figure,” Putin said. “So don’t worry about the budget.” The price for Urals blend crude on Friday was around $53 per barrel, according to Reuters data. The Kremlin chief cautioned that attempts by the West to impose a price cap would lead to the global collapse of the oil industry and then a catastrophic rise in prices. “This will lead to the collapse of the industry itself, because the consumer will always insist that the price be lower. The industry is already under-invested, under-funded, and if we listen only to consumers, then this investment will be reduced to zero,” Putin said. “All this will lead at some stage to a catastrophic surge in prices and to the collapse of the global energy sector. This is a stupid proposal, ill-conceived and poorly thought-out.” NN: I take the possibility of a Russian, Saudi and OPEC “reduction in production” very seriously. At $60 oil they will have no choice. In fact they are already producing under their reduced quota… See next story
OPEC Misses Production Quota By 310,000 Bpd
A new survey from Argus showed on Friday that OPEC+ production fell to 38.29 million bpd last month—1.81 million barrels per day short of its reduced quota. The 19 OPEC+ members subject to the quota produced 310,000 bpd fewer barrels in November when compared to the month prior. But that’s still 1.81 million barrels per day short of its quota for November. November’s quota was a reduction of 2 million barrels per day off October levels, although it was understood at the time that the group might not be able to reach even that reduced target. Non-OPEC members of the OPEC+ group faired better than the traditional OPEC members, raising the combined output by 460,000 bpd—an eight-month high, according to Argus. Most of those increases came from Kazakstan, which saw a 330,000 bpd production increase, and Russia’s production, which saw an increase of 190,000 bpdafter restarting Sakhalin 1. OPEC’s crude production was down 770,000 bpd for November, a six-month low. The production declines were led by Saudi Arabia, which saw its output reduced by 440,000 bpd. The biggest laggards among the broader OPEC+ group now, according to Argus, are Russia, producing 670,000 bpd under target; Nigeria, producing 530,000 bpd under target, Angola, producing 350,000 bpd under target, and Malaysia, producing 170,000 under target. The members of the group that met or exceeded their production target are Oman, Kazakhstan, Bahrain, Iraq, Kuwait, UAE, Algeria, and Gabon. Overall, Non-OPEC members under produced by 92,000 bpd, while OPEC members part of the quotas under produced by 90,000 bpd. Crude oil prices have fallen substantially this week, prompting some to forecast that the OPEC+ group could cut oil production to prop up crude prices. Brent crude was set to finish out the week more than $10 under this time last week—well below what most analysts suspect is OPEC’s price defense trigger. NN: AS stated above OPEC will cut production to defend price….. AND has already started!