A short-term cap in oil output would reduce market volatility, Russian Energy Minister Alexander Novak said on Monday at a meeting with OPEC Secretary-General Mohammed Barkindo, as both are looking at ways to stabilise prices.
Russia is the world’s largest oil producer but not a member of the Organisation of the Petroleum Exporting Countries and its budget has been hit by low oil prices, the same as for many OPEC nations.
Novak, in Vienna after visiting Saudi Arabia over the weekend for talks with Saudi Energy Minister Khalid al-Falih, said sharp falls in the price of crude threatened to trigger an oil deficit and unpredictable volatility in prices.
“That’s why … (an oil output) freeze or even a cut for a certain period of time is a right decision for global energy … Being a short-term measure, an oil output cap may help to lower volatility in the market and make it more stable,” Novak said.
Last month in Algiers, OPEC agreed modest output cuts that are due to be set in stone in coming weeks. The goal is to trim production to a range of 32.50-33.0 million barrels per day (bpd).
OPEC’s Barkindo said before Monday’s meeting, which also included Qatar Energy Minister Mohammed al-Sada, that Russia and OPEC were “committed to stable and predictable markets”.
“While there are signs that the rebalancing of the fundamentals is under way with overall non-OPEC supply contracting this year and demand … at healthy levels, the large stock overhang continues to be a major concern,” Barkindo said.
Neither Novak nor Barkindo said at which levels Russia could cap its production, which reached a record-high 11.1 million bpd in September.
Novak has repeatedly said Russia would prefer to freeze output rather than cut but would consider specific steps after OPEC members reach agreement.