Opec+: Saudi Arabian willingness to help Russia may run out next year

Opec+: Saudi Arabian willingness to help Russia may run out next year

Vladimir Putin has few friends outside Russia. He should therefore offer a hearty bolshoe spasibo to his oil-producing brethren in Opec+. They have heeded his suggestion for sharp production cuts. Wednesday’s Vienna meeting should include a higher than expected 1mn barrel per day reduction to support sagging benchmark crude prices.

Brent bounced 4 per cent on Monday to more than $88 per barrel. But it has fallen over a quarter since peaking in early June.

Opec+ says it is worried about oil market fundamentals. Russia has more to fret about.

Its oil is under sanctions in the west. Indian and Chinese customers are only sopping up Russian production because benchmark Urals crude trades so cheaply, currently about $75 per barrel, according to S&P Platts. That large discount did not exist prior to the Ukraine invasion. For Russia, both price and volumes have fallen year on year.

Production has dropped by 200,000 barrels daily compared with September last year, to about 10.5mn per day, according to Energy Aspects. Russia supplied the world with roughly a tenth of its oil before invading Ukraine.

Unusually, Opec+ is now willing to cede market share to producers outside its cartel, such as international oil companies. That shows that Opec+ is