Russia leaning towards leaving oil output unchanged ahead of OPEC+ meeting

MOSCOW, May 26 (Reuters) – Russia is leaning towards leaving oil production volumes unchanged ahead of an OPEC+ policy meeting on June 4 because Moscow is content with current prices and output, three sources with knowledge of current Russian thinking told Reuters.

OPEC+, which groups the Organization of the Petroleum Exporting Countries with Russia and other allies, surprised the market on April 2 with further output cuts that pushed up the price of oil.

Russian President Vladimir Putin said on Wednesday that energy prices were approaching “economically justified” levels. Putin’s point man on oil, Deputy Prime Minister Alexander Novak, said on Thursday that he didn’t expect new steps from OPEC+.

Novak said that Russia and its OPEC+ partners would make a decision on what is best for the oil market when they meet in Vienna.

By supporting current production levels, Moscow hopes it will be able to maintain stable oil prices without exceeding the West’s imposed price cap of $60 per barrel for its Urals blend.

“Further production cuts are unlikely,” a source familiar with Russia’s position told Reuters on condition of anonymity due to the sensitivity of the matter.

A second source, who also spoke on condition of anonymity, said that it was not in Russia’s interests to reduce oil output right now.

Russia has already pledged to reduce its output by 500,000 barrels per day (bpd) to 9.5 million bpd from March until year-end.

“Russia is hardly coping with the promised production cuts, while it doesn’t need additional cuts in the current market environment,” a source in a Russian oil major told Reuters.

The Russian government declined to comment on OPEC+ policy.

Russia is the world’s second largest oil exporter after Saudi Arabia, whose energy minister Prince Abdulaziz bin Salman this week warned short sellers to “watch out”.

The West’s attempt to impose a price cap on Russian oil has complicated Moscow’s output calculations – unlike the rest of OPEC+, it isn’t seeking to maximise prices.

If Russia can keep the Urals price below the price cap, it makes it easier to keep its oil flowing to the global market.

Urals has been trading at between $53 and $57 per barrel per barrel this month, a comfortable range for Russia.