Putin, ahead of OPEC meeting, says current oil prices acceptable
MOSCOW – Russian President Vladimir Putin said on Sunday that current oil prices were acceptable despite their steep decline last week driven by concerns about the global spread of the coronavirus.
The Organization of the Petroleum Exporting Countries, Russia and other producers, known as OPEC+, are due to meet in Vienna this week to decide on further policy as their supply cut deal expires at the end of March.
Several key OPEC members are leaning towards a bigger than previously expected oil output cut, four sources with knowledge of the talks have told Reuters. Russia is yet to outline its stance on proposals for further cuts.
“I want to stress that for the Russian budget, for our economy the current oil prices level is acceptable,” Putin told a meeting with Russian energy officials and producers to discuss the coronavirus and its implications.
However, he also said it was difficult to forecast future moves in oil prices and Russia needs to be ready for various scenarios.
The price of Brent crude slumped to $50.05 <LCOc1> on Friday, its lowest since late 2018 on fears the coronavirus outbreak will hit oil demand badly.
OPEC+ has “proved to be an effective instrument to ensure long-term stability on global energy markets,” Putin told the meeting, with his comments released on the Kremlin website.
“Thanks to that we have obtained extra budget revenues and, what is important, provided a possibility for upstream companies to confidently invest in promising development projects.”
Russia, which has more than $560 billion in its reserves, sees its budget balanced at an average Brent crude price of $42.2 per barrel this year.
“Our accumulated reserves, including the National Wealth Fund, are enough for ensuring a stable situation, the fulfilment of all budget and social liabilities even under a possible deterioration of the global economic situation,” Putin said.
Putin asked participants at the meeting for their views on further possible actions on the global oil market and said he hoped that steps taken by Russia to prevent the spread of the virus were effective.
Russia has limited entry for Chinese, South Korean and Iranian citizens and has said it will deport 88 foreign nationals for allegedly violating quarantine measures.
Three Russian nationals are receiving treatment in Russia after they contracted the virus on a cruise ship in Japan, the authorities have said. Two Chinese nationals were earlier taken to hospital in Russia with the virus but have since recovered.
Last week, the rouble slid beyond 67 per dollar to its weakest since early 2019 and the stock market dropped, pricing in a global sell-off and another increase in tensions with Turkey over Syria.
(Content and photos syndicated via Reuters)