Delegates from the world’s biggest petrostates convened on the side of the International Energy Forum in Algeria earlier this week to try and hash out an agreement to”freeze” their production at current levels. Those talks, like the round that preceded them this past April in Doha, failed, but on Wednesday OPEC got together and tentatively agreed to cut production by 800,000 barrels per day. This deal isn’t as inclusive as the freeze talks were hoping to be because it doesn’t include non-OPEC petrostates like Russia. Nevertheless, Caracas hopes Moscow will join in on the production cuts, as Reuters reports:
“I am very optimistic that major non-OPEC producing countries, such as the Russian Federation, will also take part in this joint effort of OPEC countries,” [said Venezuelan president Nicolas Maduro]…Maduro said he is convinced that there will be “a stable oil market” if OPEC and non-OPEC countries pledge to cut production.
Venezuela is locked in something of an economic death spiral, and low oil prices are putting tremendous strain on the country’s fiscal health, so it’s not surprising that Maduro is publicly clamoring for wider participation in production cuts. After all, his oil minister, Eulogio Del Pino, has for months been agitating for suppliers to do something to help increase global oil prices.But will the Kremlin play ball? Not likely, you believe the Russian energy minister. Reuters reports:
Russia is aiming to keep its oil production at near-record levels despite OPEC’s decision to modestly reduce its output, Russian Energy Minister Alexander Novak said on Thursday. […]“Russia will carefully consider those proposals which will be eventually drawn up. … But our position is keeping the volume of production at the level that has been reached. These are the main principles that were earlier being considered, [Novak said].
Even in its greatest moment of unity in eight years, OPEC can still find a way expose just how fragile these sorts of deals between petrostates really are.