Russia Not Prepared to Freeze Ahead of OPEC Meeting

As Russian energy minister Alexander Novak flies to Algeria this week for talks with OPEC on output cuts, developments at home indicate non-OPEC Russia is still ill prepared for any coordinated production action.

Five leading Russian oil companies, responsible for three quarters of output in the world’s largest producer, all say they will be boosting output next year after reaching record levels in recent months.

No doubt, all these companies would obey if President Vladimir Putin ordered them to curtail production.

But so far Putin has had no meeting with leading Russian oil producers – state-owned or private – and even the energy ministry has yet to hold such consultations to sort out details and logistics of any output action.

“We think that it is impossible to agree… No one trusts anyone, everyone has been just ramping up production (within OPEC and outside),” a source at Russia’s leading oil producer, Rosneft, said.

Kremlin-controlled Rosneft (ROSN.MM), which accounts for over a third of Russian production, has been the biggest opponent of the global oil freeze deal since it was first discussed at the beginning of the year.

Rosneft’s influential chief, Igor Sechin, a close ally of Putin, has said internal differences were killing OPEC and its ability to influence the market.

via Reuters

Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza