Russia Sends Mixed Signals

The Russian government seems to be divided over oil cuts, with the Prime Minister wanting to keep its distance from OPEC while his deputy said bigger export cuts were possible. This these mixed signals have caused some confusion in the market.

The country is coming under heavy pressure from OPEC to cut exports as part of a global effort to shore up sagging prices. But Prime Minister Mikhail Kasyanov said the world's second largest oil exporter would not be influenced by the cartel when working out oil policy. "We are not OPEC members and are not going to be influenced by OPEC decisions," he stated. "We are holding consultations (with OPEC) but we are independent producers and we determine our output and export and oil product policy independently taking into account different factors," Kasyanov said. He did not say whether Russia could deepen reductions in production and exports in January beyond the 50,000 bpd cut already announced for the fourth quarter 2001, while his Deputy, Viktor Khristenko, said such a decision was still possible. Khristenko said in Japan that a meeting of major Russian producers was due to be held early next month.

The cartel said it was ready to cut 1.5 million bpd from its own exports, but only if non-OPEC states such as Russia, Mexico and Norway joined the effort by cutting their output by 500,000 bpd from January 2002. The cartel, which wants Russia to cut its output and exports by 150,000-300,000 bpd, was disappointed with the 50,000 bpd cut offered for the fourth quarter.