Why Vladimir Putin Won't Be Helping OPEC to Cut Oil Production
Few things have more potential to spook the oil market than the prospect of Russia joining forces with OPEC. Speculation that such a move was afoot last month drove crude to its biggest three-day gain in 25 years.Despite the market buzz, there are sound economic and technical reasons why this is unlikely to happen.
“Russia and OPEC have talked about cooperation in cutting production many times in the past, but the results of that were always dismal and disappointing,” said Nordine Ait-Laoussine, president of Geneva-based consultant Nalcosa and former energy minister of Algeria. “Russia has assumed that when oil prices go down, OPEC countries are in a weaker position and are more likely to be the first to cut its production, and they always did.”
Russia vies with Saudi Arabia and the U.S. for the title of world’s largest oil producer. When Venezuelan President Nicolas Maduro said last week he had agreed with his Russian counterpart Vladimir Putin on “initiatives” to bring stability to the oil market, he was attempting to resuscitate a plan to boost prices that went nowhere in November. (by Elena Mazneva and Dina Khrennikova, Bloomberg Business)