In the wake of the presidential election in Russia, the DER-Advisory Board discussed its economic and political consequences, possibilities to reach better relations between Russia and Europe even in times of the sanctions-politics of the US administration and possible steps toward an enhancement of the situation in Eastern Ukraine.
July 28th, 2018
Wall Street Journal
By Benoit Faucon in London and Summer Said in Dubai
Russia's energy minister signaled Friday that a coalition of producers could pump more oil than agreed by year-end, a move which would please the Trump administration but signal the possible death of an Organization of the Petroleum Exporting Countries production deal.
The remarks come amid rising uncertainties over Middle-Eastern oil supplies. Saudi Arabia was forced to stop some of its exports following a Yemeni rebel attack on its tankers on Wednesday, and Iran has threatened to block the Strait of Hormuz, a key seaborne oil export route.
Last month, Russia, Saudi Arabia and other producers agreed to increase production as long as it still respected production levels the nations agreed to in 2016. But the remarks from Alexander Novak, Russia's energy minister, now suggest Moscow won't respect its own quota and may be open to a collective boost even higher than it endorsed in June.
The decision, which could bring back 1 million barrels a day to global markets, came after President Trump pressed producers to moderate oil prices as he brought back a U.S. ban on Iran's oil exports.
But speaking Friday to reporters on the sidelines of a conference in Johannesburg, South Africa, Mr. Novak "did not rule out...an increase in oil production in excess of 1 million barrels a day may be discussed," according to his ministry's website. He said the decision would depend on market conditions and would be discussed at a committee gathering including Russia, a non-OPEC member, and Saudi Arabia, the cartel's kingpin, on Sept. 20 in Algeria.
Russia is already in the process of increasing its production by up to 250,000 barrels a day, Mr. Novak said. That would erase most of its previous supply cuts. In addition, Mr. Novak said Moscow planned to boost output next year by an additional 4 million metric tons-equivalent to 80,000 barrels a day.
The Russian push is likely to satisfy Mr. Trump, who has been asking oil producers to turn up the spigots. "The OPEC Monopoly must remember that gas prices are up & they are doing little to help," he said in a July 4 tweet. "REDUCE PRICING NOW!"
In his statement, Mr. Novak insisted he still wanted to respect the 2016 agreement signed with OPEC to keep curbs on production, called the Declaration of Cooperation. But an OPEC official in the Persian Gulf said the remarks confirmed "the slow death of the OPEC-non-OPEC deal" to curb output.
"There is a mutual understanding between Saudis and Russians that quota and compliance are out of the window," another Gulf official said.
"The Russian-led response to Mr. Trump's tweets has effectively ended the Declaration of Cooperation," said Helima Croft, chief commodities strategist at Canadian broker RBC.
Like Russia, Saudi Arabia boosted production by 459,000 barrels a day in June to make up for lost production in crisis-hit Venezuela, and in anticipation of the loss of Iran oil exports when the U.S. brings back sanctions later this year.
Russia's new plan to boost output is likely to irk Iran. Tehran has opposed plans by others to offset its production but is also allied with Moscow in the Syrian civil war. On Monday, Iran's oil minister Bijan Zanganeh said, "dishonoring the OPEC deal by some countries would cause the organization to suffer greatly from the point of view of dignity," according to the ministry's news agency Shana.
The purpose of this Memorandum is to propose a strategy to reframe the discussion of the conflict in the Donbas and prepare a political foundation for post-war stability in Ukraine. This might be done by moving the focus of the Normandy Group from military de-escalation to economic reconstruction. The Minsk Process has succeeded so far in stopping the war, but it offers no framework for the reconstruction of those parts of Ukraine which were heavily damaged during one of the worst military conflicts in Europe since decades. De-escalation has so far not led to a lasting peace and restored prosperity. The Minsk Process is missing this last chapter: a credible Plan for Ukraine’s Reconstruction in the East.