Last week, OPEC+ announced it would be invoking new voluntary cuts in oil supplies, but those cuts will take some time to take effect.
On Tuesday, the Kremlin confirmed the cuts in oil production, even as the overall oil market expressed skepticism about whether the large oil-producing group would even be able to fully implement its plans.
Russia is not a formal member of the OPEC+ group, though it cooperates with three of its members — Iran, Saudi Arabia, and the United Arab Emirates.
After OPEC+ made its announcement last week, oil prices dropped 2%. However, the futures for Brent crude — which is the global pricing benchmark that sets the price of about two-thirds of all crude oil that’s traded internationally — bounced back as of Tuesday.
Dmitry Peskov, a spokesman for the Kremlin, said this week that the effect of the production cuts would be delayed due to “certain processes of inertia in the oil market.”
Russian President Vladimir Putin is also set to travel to Saudi Arabia and the UAE on Wednesday, followed by him hosting Ebrahim Raisi, the president of Iran, in Moscow on Thursday.
Peskov told reporters that all discussions about oil production are held within the format of OPEC+, but that cooperation on that front is always part of the discussions between the world leaders when they meet.
OPEC+ initiated the production cuts as a way to maintain “a stable and predictable situation in the global oil market,” according to Yury Ushkov, who serves as a foreign policy adviser to Putin. To that end, he said that close coordination between Russia and Saudi Arabia was “a reliable guarantee” that it could be achieved.
While the external message is one of unity and benefits from OPEC+, not everyone believes all members are on the same page.
As part of the announcement, Saudi Arabia agreed to cut production by 1 million barrels per day, while Russia will reduce that number by 200,000.
There are also some fears that a larger price war over oil could eventually break out. In the meantime, the production of crude oil in the U.S. continues its record-breaking year with oil prices being so high.
U.S. crude oil production broke another record in September, putting additional pressure on the #OPEC+ group, which looks to keep oil prices above $80 per barrel by controlling "market stability."https://t.co/l3bZmPsjKQ
— OilPrice.com (@OilandEnergy) December 5, 2023