Russian prime-minister Mikhail Kasyanov being on visit to Spain has made a statement concerning reduction of Russian oil export. “Russia will not agree to any appreciable reduction of its oil export. The question is about 30-thousand-barrel reduction a day, what makes only 1 percent from daily extraction.”
According to the Russian prime-minister, a bigger, than it was declared recently by oil companies, reduction of Russian oil export could cause violating one of the principles on which Russian oil price policy is based. As a result of yesterday’s auction in New York raw materials exchange, price of US West Texas Intermediate oil reached the lowest level since June 1999 – under 19 USD for a barrel, while in London raw materials exchange it was even lower than 18 USD for a barrel.
OPEC is panic stricken. The planned reduction of daily oil extraction by 1.5 million barrel cannot save the situation. First-rate world oil producers – Russia and Norway do not agree to the cartel’s conditions.
“We propose a simple formula: OPEC reduces oil extraction by 1.5 million barrel a day, while other oil-producing countries – by 500,000 barrel,” – Iraqi oil minister Amir Rashid said. His colleague from Kuwait, Saud Al Sabakh added oil prices would still decrease without co-ordinating position with independent experts”. “The market can no longer be kept only by OPEC power, because its share on the market is smaller, than that one of others,” – he said.
Libyan delegate stated OPEC could summon an extraordinary meeting, if independent experts refuse to seriously reduce oil extraction. “If Russia does not agree to oil export reduction, OPEC will also leave the things how they are,” – delegates said. Already several days ago, oil minister of Saudi Arabia Ali Al Nami confirmed OPEC was disappointed with Russian proposal to reduce its oil extraction only by 30,000 barrel by daily output of 7 million. Without Russian assistance, OPEC is absolutely incapable to keep oil price on 20-dollar level.
Russia is the second biggest, after Saudi Arabia, oil exporter of the world and the most important oil supplier to Germany. The Russian government’s decision will force OPEC countries to much more seriously reduce oil extraction to secure themselves. The question could be about 2-2.5 million barrel a day. Otherwise, the situation of the 70s could be repeated, when oil price reached $ 15.00 for a barrel. Though it is also possible, that the cartel’s members will simply neglect their mutual obligations and will pump out oil exclusively for saving their economies.