Russia will join the Opec+ talks on Sunday having barely fulfilled its pledged production cuts, but keen to secure a share of any potential output increase.
In recent months, Russia has indicated it would welcome a return to production growth, said analysts from Fitch Ratings Inc. and IHS Markit Inc. That’s back on the agenda after pledges by Saudi Arabia and its Persian Gulf allies to fill the supply gap created by tighter US sanctions on Iran.
Moscow “sees a place for its extra barrels in the market,” said Maksim Nechaev, Russia director for IHS Markit. The country has the means to increase production by around 300,000 barrels a day within a short period of time “and this is probably the message that Russia will bring.”
Russia’s Energy Ministry did not reply to a Bloomberg request seeking comment on the nation’s position at the weekend talks in Jeddah.
While it may appear that the interests of Saudi Arabia and Russia — the two most powerful members of the Opec+ coalition — are coming into alignment, it’s by no means certain that the meeting in Jeddah on Sunday will lay the groundwork for a formal production increase.
For months, the kingdom has cut production deeper and faster than required under the Opec+ deal. That means it could pump an additional 500,000 barrels a day — equivalent to almost half Iran’s exports — while still abiding by its current quota. Russia doesn’t have any such leeway within the confines of the deal, having only just achieved its output target in the first few days of May.
While there are differences to overcome, there are also signs that the era of cooperation between the Organization of Petroleum Exporting Countries and its allies, which sparked a recovery in oil prices from a years-long slump, will continue.
IEA slashes oil-demand forecast
Global oil demand will grow more slowly than previously thought following an economic lull in Asia, the International Energy Agency (IEA) said, while warning that supplies stand to tighten due to US sanctions on Iran.
Disappointing fuel consumption in China, Japan and Brazil meant 2019 started with a “tough quarter,” the agency said, lowering its global demand estimate for the first time since October.