Russia Agrees to Oil Cut in January
Russia agreed to cut its oil exports by 150,000 barrels a day from January 1, following pressure from OPEC. The decision is a major coup for OPEC, whose members increased pressure for non-OPEC countries to cut production by saying they would cut their collective output by 1.5m b/d in the first quarter but only if non-OPEC producers cut by 500,000 b/d. Mexico and Norway said they would contribute sizeable volumes but Russia's offer of just 50,000 b/d for the fourth quarter was viewed as inadequate by the market and, in effect, stalled the whole project to boost prices.
The new Russian move was sanctioned following a meeting between Mikhail Kasayanov, Russia's prime minister, and officials from the country's largest oil companies and will take effect from January 1.
It clears the way for Opec members, excluding Iraq, to make a cut of 1.5m barrels a day and for other key non-Opec producers to make combined cuts of up to 340,000 barrels a day. The Opec secretary general, Ali Rodriguez, will consult with member countries this week. Non-Opec Norway said last month it would cut between 100,000 and 200,000 barrels a day of production if Russia made similar cuts. Mexico has said it is prepared to take at least 100,000 barrels a day off the market and Oman has said it will cut 25,000 to 40,000 barrels a day of production.