Today’s “OPEC deal” snowjob continued with the statement by Russian energy minister Novak, who moments ago have a press conference in which he praised the production cut conclusion, however, two key aspects of Russia’s contribution to the non-OPEC stood out.
First, the energy minister said that Russia would cut production “only gradually because of technical issues”, and he also refused to note from what level Russia production will be cut. The last is important, because in the past week Russia hinted that instead of actually cutting from a historical reference level, it would “cut” from a level proposed in its 2017 budget, all of which are higher than the October, or November, levels.
Here is the Reuters summary of Novak headlines
- RUSSIAN ENERGY MINISTER NOVAK SAYS WELCOMES OPEC DECISION
- NOVAK SAYS OPEC OIL DEAL IS MAJOR STEP FOR GLOBAL CRUDE INDUSTRY, AIMED AT RESTORING SUPPLY/DEMAND BALANCE
- NOVAK SAYS RUSSIA READY TO JOIN AGREEMENT ON OIL PRICE STABILIZATION
- NOVAK SAYS RUSSIA READY TO GRADUALLY CUT OIL OUTPUT BY UP TO 300,000 BPD IN H1 2017
- NOVAK SAYS RUSSIA WILL CUT PRODUCTION ONLY GRADUALLY BECAUSE OF TECHNICAL ISSUES
- NOVAK SAYS RUSSIA EXPECTS OTHER NON-OPEC COUNTRIES TO CUT OUTPUT BY UP TO 300,000 BPD
- NOVAK SAYS OPEC, NON-OPEC COUNTRIES AGREED TO MEET WITHIN 10 DAYS
- NOVAK SAYS OPEC, NON-OPEC DEAL TO BE STATED IN OIL PRODUCERS’ SPECIAL MEMORANDUM
- NOVAK GIVES NO INDICATION FROM WHICH LEVEL RUSSIA IS READY TO CUT OUTPUT.
A quick skim of these reveals that Russia has little if any intention of actually cutting production, and certainly not at once, and instead – alongside all other Non-OPEC members – will seek to capture market share from those OPEC nations, mostly Saudi Arabia, who have cut production.