Report: Russia may work with OPEC on output cut

Wed Nov 26, 2008 2:06 AM EST

Russia's energy minister said the country may coordinate oil production cuts with OPEC to help stem the slide in crude oil prices, media reports said Wednesday.

"Russia will cooperate with OPEC to defend its interest," Russian Energy Minister Sergei Shmatko said at a conference in New Delhi on Tuesday, Press Trust of India news agency reported.

"We cannot rule out cutting down of production," he said, according to the report. "In OPEC, they are actively discussing measures to protect current market of oil and reduce production."

Shmatko blamed the steep decline in crude oil prices on recessions in major economies and speculation in the oil market.

"Today's oil prices are not determined significantly by traditional parameters of demand and supply but it is under effect of the whole financial crisis and speculation," he said.

Even after the 13-nation Organization of Petroleum Exporting Countries cut oil production by 1.5 million barrels a day last month crude oil prices have fallen to about $50 a barrel — a third of their July peak of nearly $150.

"Many of the budgets of oil producing countries have been balanced based on the oil price band of between $70 to 90 per barrel," Shmatko said, according to PTI. "Russian investment has also been budgeted at $70 per barrel."

Shmatko also said that Russia was planning to form a cartel of gas producing countries along with Iran and Qatar, The Times of India newspaper reported. He gave no other details.

He warned that 2009 would be a difficult year for oil markets.

"How long this situation will last is difficult to say. The year 2009 is going to a difficult year as there will be pessimistic views and recession in oil markets," Shmatko was quoted as saying. "In the forthcoming years, there will be a significant fall in oil prices."

© 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
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{"commentId":4207430,"authorDomain":"kelvins273"}
kelvins273

So OPEC gave us stagflation in the 70s, and now OPEC and Russia are trying to give as stagcession. It's probably not going to work for them, though. In tough economic times, an increase in gas prices just cuts demand.

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    Reply#1 - Wed Nov 26, 2008 6:51 AM EST
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