Russia raises delaying OPEC+ production increases into 2021

By Olga Tanas, Dina Khrennikova and Irina Reznik on 11/2/2020

(Bloomberg) --Russian oil companies are meeting with Energy Minister Alexander Novak on Monday to discuss the possibility of delaying the easing of OPEC+ output cuts by three months, said people familiar with the matter.

There were also talks about potentially deepening the current OPEC+ cuts, but that was not considered to be the base case, said one person. The main focus was a possible delay, the people said.

OPEC+, led by Russia and Saudi Arabia, was already considering postponing the supply increase planned for January as oil prices faltered. President Vladimir Putin said last week he was open to a delay, and since then the outlook has worsened as France, Germany and the UK go back into coronavirus lockdown.

Oil slumped 10% in London last week as traders anticipated lower oil demand, just as additional supplies from Libya hit the market. That’s below the level needed to cover the budget of the government in Moscow.

Brent crude pared earlier losses of as much as 4.6%, trading 0.5% higher at $37.65 a barrel at 1:27 p.m. in London.

Russian companies are contributing the biggest tranche of production cuts after Saudi Arabia, so any change to the terms of the agreement between the Organization of Petroleum Exporting Countries and its allies requires their cooperation. Novak typically meets with senior executives from the country’s oil producers before OPEC+ policy decisions, the next of which is schedule for the end of November.

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