Russian President Vladimir Putin said on Saturday that Russia had agreed with Saudi Arabia to extend the OPEC deal to cut oil production for between six and nine months as oil prices are being squeezed again by increased supplies from the United States and the global economic slowdown.
Russian President Vladimir Putin told a news conference after talks with Saudi Crown Prince Mohammed bin Salman on the sidelines of the G-20 summit that the OPEC agreement would be extended in its current form and with the same quantities
OPEC and its allies meet in the so-called OPEC + on July 1 and 2 to discuss a 1.2 million b/d cut. The United States is not involved in the agreement.
“We will support the extension, both Russia and Saudi Arabia. With regard to the extension period, we have not yet decided whether six or nine months, may be nine months”.
The nine-month extension means that the agreement will continue to operate until 30 March 2020. Russia’s agreement also means that the OPEC meeting could be smooth, if Iran has also approved the concept.
New US sanctions on Iran have cut Tehran’s exports to a record low as the United States tries to press the Iranian regime.
The agreement, which began in 2017, has already raised Russian budget revenues by more than 7 trillion rubles (110 billion dollars), said Kiril Dmitryev, chief executive of the Russian direct investment fund, who participated in drafting the agreement between OPEC and Russia.
The strategic partnership within OPEC+ has led to the stability of oil markets and allowed fluctuation of production according to demand in the market, which contributes to stabilize investment and growth in the sector,” Putin said.
Brent crude has risen more than 25% since the beginning of this year. But a Reuter’s poll of analysts concluded that prices could fall as the global economy slows demand and the US dumps the market with crude.
Russian Energy Minister Alexander Novak said most OPEC countries, including Iran, had expressed their support for an extension of the cut-off agreement. He said it would be wise to extend the agreement for nine months instead of six to avoid increasing production during seasonal weakness of demand. “It may be logical for the agreement to continue during the winter.”