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Russian oil industry ready to discuss oil output cuts

Russia’s oil industry argued for years that it cannot cut output to support falling global prices for purely technical reasons; in reality it can – as long as it has the political will.

The days that oligarchs decided production levels according to their own private interests are long gone.

Today the state directly controls roughly half of output, with most of the rest in the hands of business figures who are loyal to President Vladimir Putin, or at least will not oppose his wishes.

Moscow has long ruled out an output cut coordinated with other producers, even during the collapse in crude prices since the middle of 2014.

Mr Alexander Novak, Energy Minister, said that Saudi Arabia had proposed that all exporters should reduce their production by up to five per cent, adding that Russia was ready to discuss the idea.

Russia’s oil industry has a chequered record on carrying out requests to cut production. On previous occasions when the Kremlin said it would consider cooperating with Opec, exports kept flowing or even increased. 

In some cases oil companies shifted their cargoes from the pipeline system to the railways or tankers where there was less state oversight.

Source : REUTERS

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