After the collapse of OPEC+ talks last week, Russia could increase output by as much as 500,000 barrels a day in the near future, said Russian Energy Minister Alexander Novak. He was speaking minutes after Saudi Aramco escalated the battle for market share by pledging record oil shipments in April.

Russia produced 11.289 million barrels a day of crude oil and condensate in February, according to preliminary data from the Energy Ministry’s CDU-TEK unit. Raising the level by another half a million barrels would bring the nation’s output to an all-time high. But Russia still won’t be able to match the production hikes planned by the Saudi kingdom within the next two months.

But while Russia stepped up its price war with Saudi Arabia on the one hand, it also said further cooperation with OPEC is possible.

The OPEC+ union, which was forged in 2016 by Russia and Saudi Arabia to support oil prices, collapsed last week when Novak refused to be drawn into accepting additional output cuts of 1.5 million barrels a day. 

The failure of the talks prompted Saudi Arabia to slash its crude prices, targeting potential buyers of Russian oil in Asia, Europe and the US. In response, oil slumped by more than it has in three decades on Monday (March 9).

But despite the ongoing battle for market share, Novak said Russia is open to further cooperation with Organization of Petroleum Exporting Countries and its allies.

In an interview with the state-run Rossiya 24 TV channel, Novak said: “I want to say that the door isn’t closed.”

In what was his first public appearance since the March 6 OPEC+ meeting, he said: “If needed, we have various tools, including reducing and increasing production, and new agreements can be reached.”

He added that OPEC+ has meetings scheduled for May or June, when the union may evaluate the market situation once again.

The Russian oil industry is now regrouping for a potential output hike from April 1, when the current OPEC+ deal will expire, Novak said, adding that the nation’s producers have the capacity to raise the output by 200,000 to 300,000 barrels a day in the short term, and by as much as 500,000 barrels a day in the near future.

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11th March 2020