Russia said today that it is open to extending the oil output deal with OPEC that has resulted in the price of crude on international markets stabilizing with a $60 handle for Brent. However, Moscow is wary of another collapse in prices when the production cuts are removed in the future.
Russian Energy Minister Alexander Novak said that Russia would discuss the details of an extension of the global deal on Nov. 30, but made no mention of how long this should last beyond its March expiry. “We see that 50 percent of oil stockpiles have been removed, the oil price has reached its balance,” reported Reuters.
“However, the targets on rebalancing the market have not been reached. Everyone supports the extension, so that the targets are finally reached,” Novak said, adding that “different options are under consideration”.
The Kremlin, along with Saudi Arabia, are pushing for a 9 month extension to October of 2018.
The problem for OPEC and Moscow is that American production is not bound by any agreement and has rebounded to record levels as prices have risen. In other words, America has benefited and gained market share as OPEC has reduced its production levels. Middle Eastern nations no longer have the ability to threaten Western consumers with boycotts or price increases. The United States may once again regain the lead as the world’s biggest producer of oil.