Putin sees few problems with freezing oil production

Data show Russia already producing oil at or near post-Soviet highs.
By Daniel J. Graeber Follow @dan_graeber Contact the Author   |   Nov. 21, 2016 at 9:21 AM
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LIMA, Nov. 21 (UPI) -- There are no serious issues standing in the way of an OPEC production proposal and Russia is ready to do its part by freezing output, the president said.

"We have spoken on this matter before and have said that we are ready to freeze production at today's level," Russia President Vladimir Putin said from the sidelines of an economic summit in Peru. "We do not think that would create any problems for our energy sector."

According to economists at the Organization of Petroleum Exporting Countries, Russia is on pace to average about 11 million barrels of oil production per day this year, about 1.8 percent higher than last year. If accurate, Russian production for the year would be at or near a post-Soviet record.

Higher levels of oil production from major producers like Russia, the United States and some members of OPEC helped pulled crude oil prices below $30 per barrel earlier this year. Recent data show some markets are still oversupplied and OPEC members are working to build consensus around an agreement to put a ceiling on production levels in an effort to pull markets back into balance.

Russian Energy Minister Alexander Novak said last week from an energy forum in Qatar that talks so far on coordinating around that agreement were constructive and all parties to the proposal were circling around a general theme.

"I cannot say for certain whether they will reach an agreement or not, but I do think it highly probably that they will," Putin said Monday. "As far as we understand the situation, there are no serious issues remaining."

Russia's position on the production proposal has been fluid and most analysts said the rhetoric so far doesn't much up with the reality of the market situation. The high-end of the production ceiling proposed by OPEC is below what the 14 members states are producing now, suggesting some cuts would be necessarily.

"Seemingly there is unanimous agreement within OPEC that production controls need to be reinstated," David Hufton, an analyst at brokerage PVM wrote in a Monday note. "There is not unanimous agreement, however, on where the burden of controls should fall."

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