Oil in Global Economy Series: Russia’s economy minister says OPEC deal hurting economy ahead of crucial meeting next week

Just a week to go before the members of the Organization of Petroleum Exporting Countries (OPEC) meet in Vienna with their participating non-OPEC countries like Russia, the Russian economy minister said that the OPEC agreement is hurting Russia’s economy. According to economy minister Maxim Oreshkin, Russia’s economic growth was negatively affected in the month of October due to the country’s participation in the agreement. This is the first time a senior Russian official has spoken against the agreement since it was commenced in November 2015. The comments from the minister came after data showed that the economic growth slowed down to 1.8 percent in the third quarter after growing 2.5 percent in the second quarter.

Russia joined the OPEC initiative with a production cut of 300,000 barrels per day compared to the November 2015 agreement. The initial agreement was again extended in May this year and is set to expire in March next year if not further extended. Oil ministers of both OPEC and participating non-OPEC countries would meet in Vienna at the OPEC headquarter on November 30th to decide on the future of the agreement.

According to official forecast, the Russian economy was set to grow by 2 percent in 2017 after two full years of recession. However, weakness in the third quarter numbers has cast doubts on that forecast. According to Mr. Oreshkin, the OPEC agreement is exerting direct pressure on the economy by curbing oil output and affecting it indirectly as the quota system restricts investments.

Russian energy minister Alexander Novak has so far resisted revealing Russia’s position on the agreement extension.