ALGIERS -- In a bid to keep Russia involved in its oil output cuts, several ministers from the Organization of Petroleum Exporting Countries have taken a diplomatic stand on talk that Russia could flood the market with crude oil poducts in coming weeks.
But Qatar's oil Minister Abdullah bin Hamad al-Attiyah warned that if Russia did "flood" the market, OPEC's current agreement to cut output would end at the group's march meeting.
"If there is no respect from others, OPEC's oil cut would be redundant," he said.
Oil ministers from OPEC member countries Nigeria, Venezuela, Algeria, Iran, Qatar and Libya joined seven other of the world's leading gas producers in the Algerian capital, over the weekend for talks on issues surrounding the natural gas market.
Venezuela's oil minister Alvaro Silva said he was confident that Russia would continue to stick by its pledge to cut oil supplies by 150,000 barrels a day until the end of March. "Russia agreed to cut output at the last meeting. We (OPEC) trust that Russia and others will continue to act on that commitment," he said.
On Dec. 28 in Cairo OPEC - excluding Iraq - agreed to cut oil output by 1.5 million b/d from Jan. 1 for six months. The move was made in a bid to shore up oil prices and followed commitments by key non OPEC oil producers including Russia, Norway and Mexico to collectively cut oil supplies by just under 500,000 b/d also from Jan 1.
Speculation has been rife in the market during recent days that Russia is about to dramatically raise its fuel oil exports. Last week Russia cut tariffs on fuel oil exports by to 10% from 20%. Analyists say the move could significantly reduce demand for crude oil as consumers will use fuel oil as a cheaper alternative.
Nigeria's oil minister Rilwanu Lukman said that OPEC doesn't work on "hypothetical" situations and that any decision by the group on its output agreement would be made if and when Russia changed its supply. Libya's oil minister Abdulhafid Mahmoud Zlitni said he was confident that OPEC would decide to leave output unchanged when it meets March 15 at its Vienna headquarters. He said the weak global economy is likely to keep crude oil demand down until later this year. Iran's oil minister Bijan Namdar Zangeneh said he realized that mild weather and inadequate storage facilities in Russia means that the country is under pressure to increase its exports.
"It doesn't mean that they want to confuse or destroy the market," Zangeneh said.
There remains a lot of uncertainty as to whether Russia will extend its crude oil output limitations beyond the end of March. Ministers in Algiers called on Russia to make a rational decision. Sources say talks are continuing to try and encourage Russia to commit to a crude oil supply cut until the end of June, to prevent oil prices from collapsing.
Speaking on the sidelines of the World Economic Forum, Russian Prime Minister Mikhail Kasyanov said Saturday Russia is committed its strategy of increasing oil output in the long term. He said Russia would review at the end of March its agreement to limit crude oil supplies.
Kasyanov wouldn't commit to extending the crude oil supply cuts and he made it clear that Russia, the world's No. 2 oil producer, isn't inching toward a permanent alliance with OPEC.