MOSCOW (BLOOMBERG) - Vladimir Putin's deal with Opec to cut oil output and boost prices three years ago was a triumph for the Russian leader, bolstering his clout on the global stage. But now he's had to to make stinging concessions after US President Donald Trump stepped in to end a price war.. Read more at straitstimes.com.
MOSCOW - Vladimir Putin's deal with Opec to cut oil output and boost prices three years ago was a triumph for the Russian leader, bolstering his clout on the global stage. But now he's had to to make stinging concessions after US President Donald Trump stepped in to end a price war.
With markets collapsing, Putin agreed to cut more than 2.5 million barrels a day of crude from the 11 million of combined crude and condensate Russia pumps each day, more than four times the reduction that he turned down in early March and more than what Saudi Arabia is obliged to cut from its output level last month. Meanwhile, hopes that the US would formally commit to its own curbs have evaporated, even as Trump takes credit for bringing about the new deal.
But Russia completely failed to anticipate the devastating impact of the coronavirus pandemic on the world economy when it walked away from the agreement with the Organization of Petroleum Exporting Countries and other big producers known as Opec+, said a senior Russian official. Holding that alliance together would have prevented the collapse in prices to an almost two-decade low that followed. Now, the Kremlin has had to negotiate a new arrangement under highly unfavorable terms, he said.
ECONOMIC PAIN But the deal marks a reversal in Putin's push to restore Russia's global influence, especially in the Middle East, where he's become a key player with interventions in places like Libya and Syria. Just how big a setback it is will be determined by whether the new deal is enough to reverse the market rout and limit the economic pain for the Kremlin.
Lukoil PJSC's billionaire shareholder Leonid Fedun likened the deal to the"humiliating and difficult" pact the Bolsheviks signed in 1918 to end Russia's participation in World War I. Still, he told the RBC news group the pact will save the country's oil industry from a production collapse of as much as 50 per cent if low prices forced a"blanket" shuttering of wells.
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