Russia’s President Vladimir Putin has contradicted the position by OPEC+ that its 1.2 million barrels per day production cut announced in April was intended to balance the markets, with the Russian leader saying it was necessary to maintain relatively high oil prices. According to Putin, the situation in the global oil markets is “absolutely stable” as Russia maintains output cuts in a bid to support prices adding that Russia was cutting production at the “required level”.
“But all our actions, including those related to voluntary production cuts, are connected precisely with the need to maintain a certain price environment on world markets, in dialogue and contact with our partners in OPEC+,” Putin added.
A week ago, the UAE energy minister Suhail al-Mazrouei told Reuters that additional voluntary output cuts by the OPEC+ producer group were implemented to balance the oil markets.
“I’m not that worried about the very short term, I think we can manage balancing the supply with demand. I’m more worried about the level of investment required for years to come,” he said.
The United States and Europe have been strongly opposed to production cuts by the cartel, with President Joe Biden’s administration accusing Saudi Arabia of colluding with Russia and supporting its war in Ukraine shortly after OPEC+ announced the first cuts.
“The Saudi Foreign Ministry can try to spin or deflect, but the facts are simple, this will increase Russian revenues and blunt the effectiveness of sanctions,” National Security Council spokesman John Kirby said in a strongly worded statement in October.
U.S.-based Energy Information Administration (EIA) recently revised down its crude oil price forecast in the May Short-Term Energy Outlook (STEO) and said the recent declines in oil prices were triggered by concerns about China’s economic growth as well as concerns regarding a possible U.S. recession. The EIA has predicted that a drop in OPEC production as well as seasonal increases in demand will ‘‘…slightly raise prices over the next few months.’’
Oil futures surge about 3% as Russia cuts output
The prices of crude oil futures soared more than 3% on Wednesday following the news that Russia reduced its production by the planned half a million barrels per day this month. Commenting on the move, Russian Deputy Prime Minister Alexander Novak asserted earlier today the global oil market is “balanced.” Over the past day, reports from both the American Petroleum Institute (API) and the Energy Information Administration (EIA) pointed toward an increase in the number of crude oil inventories across the United States. West Texas Intermediate (WTI) for settlements in June jumped by 3.12% to sell at $72.86 per barrel at 1:12 pm ET, while Brent futures for July settlements simultaneously surged 2.78% to $76.98 a barrel. The prices are currently trading around a weekly high.