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Wednesday, January 27

Somebody blinked: Russia, OPEC to confab on cutting oil production to boost prices

Russians want to talk to OPEC about output, pipeline chief says
Jan 27, 2016 3:16pm EST

(MOSCOW)  Russian officials have decided they should talk to Saudi Arabia and other OPEC countries about output cuts to bolster oil prices, the head of Russia's pipeline monopoly said on Wednesday, remarks that helped spur a sharp rise in world prices.

Oil futures surged more than 5 percent after the comments by Nikolai Tokarev, head of oil pipeline monopoly Transneft, which gave the strongest hint yet of possible cooperation between the top non-OPEC oil producer and the cartel to try to reverse a record glut.

Brent crude rose by over $2 to $32.95 a barrel, after a session low of $30.83. It was also boosted by U.S. demand following a blizzard.

But there was still a long journey from starting discussions to actual cuts by Russian oil producers, with many of them saying reducing output was technically very difficult and could lead to Russia losing market share to its competitors.

Tokarev said oil executives and government officials meeting in Moscow on Tuesday had reached the conclusion that talks with OPEC were needed to shore up the oil price.

"At the meeting there was discussion in particular about the oil price and what steps we should take collectively to change the situation for the better, including negotiations within the framework of OPEC as a whole, and bilaterally," Russian news agencies quoted Tokarev as saying.

"The main initiative is being shown by, of course, our Saudi partners. They are the main negotiators. That means that they are the ones we need to discuss this with first of all."

He said output cuts would be on the agenda for talks with OPEC countries: "Yes, that is one of the levers or mechanisms that would allow us to in some way balance the oil price."

An energy ministry representative confirmed to Reuters that possible coordination with OPEC had been discussed at the meeting, which the ministry hosted.

"The meeting participants discussed the possibility of coordination of actions with OPEC members amid unfavorable market conditions on the global oil market," the Energy Ministry official said.


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