The World Energy Congress got underway in Istanbul today creating another opportunity for OPEC ministers and Russia to talk up oil prices on the heels of last month’s Algiers “deal” to limit production.
President Putin attended the opening day and used his appearance to promote the OPEC Algiers deal. Putin said “Russia is ready to join in joint measures to limit output” but added that “we think that a freeze or even a cut in oil production is probably the only proper decision to preserve stability in the global energy market.”
The Russian President’s comments sent oil markets and headline writers into hyper-drive on Monday. But a closer examination of the situation should provide some caution.
Earlier on Monday Russia’s energy minister Alexander Novak said Russia would prefer to freeze its output at current levels rather than make reductions. The production freeze theme was echoed by Gazprom’s deputy CEO Alexander Medvedev who also said on Monday “Freeze not contraction.”
The freeze play is not insignificant since Russia’s current October production is at a post-Soviet record of 11.2 million barrels a day.
Still Russia is not taking any unilateral action to stabilize prices as President Putin said it defers a decision if an OPEC deal in November “will materialize.” It does not seem that Russia is too confident in the prospects for an OPEC deal. Russia is essentially telling OPEC: you go first.
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