Russian President Vladimir Putin has said he’d like to see Russia and the OPEC cartel reach a deal to bolster oil prices by freezing production, and he expects a dispute over Iran’s involvement can be resolved.
“From the viewpoint of economic sense and logic, it would be correct to find some sort of compromise,” Putin said in an interview with Bloomberg News published on September 2.
“I am confident that everyone understands that. We believe that this is the right decision for world energy,” he said.
Putin’s comments, which contradicted a recent statement by Russia’s energy minister that a production freeze may not be necessary, sent oil prices soaring on September 2, with premium crude gaining $1.38 to close at $44.44 in London trading.
Talks between Russia and OPEC on an output freeze collapsed in April after Iran insisted that it should be able to keep raising production that was depressed for years by international economic sanctions.
Saudi Arabia at the time refused to go ahead with a freeze unless Iran joined in. But Putin said all countries now recognize that Tehran should be allowed to continue raising output to reach its goal of pumping at Iran’s pre-sanctions level of 4mn barrels a day.
The Russian president said he may recommend reviving the output freeze plan when he meets with Saudi Deputy Crown Prince Mohammed bin Salman at the Group of 20 summit in China this week.
Oil prices rallied more than 10% last month on speculation the Organization of Petroleum Exporting Countries would revive discussion of an output freeze with Russia and other major producers outside the cartel at a meeting in Algiers this month.
The prolonged slump in crude prices has been battering the economies of Russia and other producers, giving the oil market rivals reason to cooperate.
“I would very much like to hope that every participant of this market that’s interested in maintaining stable and fair global energy prices will in the end make the necessary decision,” Putin told Bloomberg.
Prince Mohammed “is a very reliable partner with whom you can reach agreements, and can be certain that those agreements will be honoured,” he said.
While Putin seemed enthusiastic about reviving the output freeze plan, Russian Energy Minister Aleksandr Novak said on September 1 that no accord would be necessary as long as prices are around $50 a barrel.
Prices have been trading not far below that level for weeks, but seem stuck in the mid-$40 range, which is less than half the levels over $100 seen in 2014.
Novak took a different tack on September 2 after Putin’s comments were published, saying Russia is ready to take part in informal talks with OPEC later this month, even if a deal isn’t immediately reached.
“I think this is just the first step,” he said.
