Oil in Global Economy Series: Russia’s role in OPEC deal remains fuzzy

Russia has undoubtedly played a key role in uniting the OPEC members in September behind a surprising production freeze deal, where the OPEC agreed to accommodate exemptions for Libya, Iran, and Nigeria. While we remain doubtful over the deal, it is important to acknowledge that if the OPEC members and Russia can pull this through, it would certainly be a milestone not only for the oil markets as well as geopolitical influence.

It is well expected that Russia would also join the production freeze initiative and probably go for some production cuts. However, the country has yet to commit to any such actions. Russian energy minister Alexander Novak will hold several meetings with Saudi Arabian counterpart Khalid al-Falih until the OPEC meeting in November. Russia has previously expressed interest in joining the deal but no solid confirmation has been made and the country continues to increase production.

Meanwhile, the chief of Rosneft accused Saudi Arabia of market share war in traditional Russia’s playground such as Poland by oil dumping activity. His comments, though not official but indicated that there may not be cuts or production freeze from the Russian side.

All in all, while Russia has emerged as a key influencing nation in the Middle East, its role in the production freeze deal remains murky.