Russia has rejected suggestions that a market-driven fall in oil production from US shale producers could count towards the country’s share of a potential global crude reduction deal, dampening hopes of a significant agreement this week. Russia, Saudi Arabia and other major oil producers including the US are set to hold meetings on Thursday and Friday in an attempt to hash out a deal to cut global oil production, after a dramatic fall in demand because of the coronavirus pandemic caused prices to drop by around 50 percent. But Moscow has said it would only agree to a deal if the US also accepts mandated curbs on its production, and on Wednesday dismissed an idea that a natural reduction of unprofitable shale production because of the lower oil price could account for the country’s share of cuts.
“These are completely different reductions. You compare the general reduction in demand with reductions for stabilising world markets. It’s like comparing length and breadth,” said Dmitry Peskov, spokesman for president Vladimir Putin. The rejection is a sign that the Kremlin is demanding more cuts from US oil producers than President Donald Trump has suggested would be possible.
Traders banking on a deal this week have helped drive Brent crude, the global benchmark, around 40 percent higher since it hit an 18- year low last month. It is still more than so per cent lower than at the start of the year.
Opec members and allies such as Russia will meet on Thursday and a G20 meeting of energy ministers will take place on Friday. A key part of the G20 plan is for countries with private sector-run industries to offer already-announced cuts to capital expenditure as their contribution, according to people familiar with the matter.