Venezuela's Maduro Says Putin Agrees to Support Oil Prices

Updated on
  • Maduro wants oil price above $70 a barrel; price about $50 now
  • Venezuela among OPEC members worst hit by oil price slump

OPEC member Venezuela and Russia, the largest oil exporter outside the group, agreed on “initiatives” to bring stability to the market, according to Venezuelan President Nicolas Maduro.

Russian President Vladimir Putin and Maduro “have agreed on some initiatives that will be known when put in place, to achieve stability of the oil market,” Maduro said after a meeting with his Russian counterpart in China on Thursday, according to Venezuela’s state-news agency AVN. “Stable prices may be best for the world economy and, at present, prices at least above $70 a barrel are the best for ensuring energy investment in the next 50 years.”

Putin and Maduro have agreed to continue talks between OPEC and non-OPEC oil producers, but not on an output cut that would support prices, Russia’s Energy Minister Alexander Novak told reporters in Vladivostok on Friday. No producing country is willing to reduce its output, he said.

Russia is comfortable with an oil price above $60 a barrel, Deputy Prime Minister Arkady Dvorkovich said Friday at a forum in Cernobbio, Italy.

The 12-member Organization of Petroleum Exporting Countries, which produces 40 percent of the world’s oil, earlier this week said in a monthly bulletin that it’s prepared to discuss “fair and reasonable prices” with other crude exporters, while adding there’s no easy fix and that it won’t shoulder the burden of propping up prices on its own.

‘Fragile Five’

Crude sank to a six-year low last week and has lost about half its value in the past year as Saudi Arabia, the world’s top exporter, led OPEC to reject demands from members including Algeria and Venezuela to cut supply to bolster prices. The group opted to maintain its production target to protect market share amid surging output from the U.S., Canada and other countries.

Cash-strapped Venezuela is among OPEC’s most vulnerable members to political turmoil, as the oil price slump has caused shortages of basic goods ahead of parliamentary elections in December, RBC analysts Christopher Louney and Helima Croft said in a report last month. Along with Algeria, Iraq, Libya and Nigeria, it’s one of OPEC’s “Fragile Five” whose currencies are weakening and current account deficits are widening, the analysts said.

“There is no quick fix, but if there is a willingness to face the oil industry’s challenges together, then the prospects for the future have to be a lot better than what everyone involved in the industry has been experiencing over the past nine months or so,” according to the opening commentary in the OPEC Bulletin, the group’s monthly magazine, published Monday. “As the organization has stressed on numerous occasions, it stands ready to talk to all other producers.”

Rising Production

OPEC has ramped up daily output in the past three months above 32 million barrels a day, the highest level since 2012, on higher supply from Saudi Arabia and Iraq. That exceeds an official target of 30 million. Iran’s nuclear deal with world powers in July may free up its oil exports, leading the group’s output to increase further.

A March initiative by Algeria’s President Abdelaziz Bouteflika to organize a coordinated effort to counter the oil price slump between OPEC and non-OPEC producers met with no response from Saudi Arabia. In a December interview to the Middle East Economic Survey, Saudi Arabian Oil Minister Ali al-Naimi said a meeting with non-OPEC producers Russia and Mexico in Vienna produced no result as the two nations declined to commit to supply cuts. The talks, also attended by Venezuela, were held before the November meeting where the decision to preserve market share was taken.