Moscow will follow OPEC decision not to cut oil output: minister

OPEC agreed on Thursday to roll over the ceiling of 30 million barrels per day

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OPEC’s decision to abstain from cuts in oil production has forced Russia not to proceed with its own cuts, Russian First Deputy Prime Minister Igor Shuvalov said on Saturday, TASS news agency reported.

The Organization of the Petroleum Exporting Countries agreed on Thursday to roll over the ceiling of 30 million barrels per day, at least 1 million above OPEC’s own estimates of demand for its oil next year.

Oil prices have dived after the decision, reaching a new four-year low. North Sea Brent fell by $2.43, or 3.3 percent on the day, to $70.15 on Friday.

Russia is one of the world’s leading oil producers, with oil and natural gas sales representing half of its budget, which is balanced when oil is at $100. The fall in prices has hit hard Russia’s economy, already teetering on the brink of recession.

“The experts say that one of the main reasons behind the falling oil prices is that some Arab oil producing countries... are squeezing out shale oil from the international market,” Shuvalov told state-run TV Rossiya-1, according to TASS.

“If such actions are happening with the aim to fix or confirm one’s position on the market, we should not do anything at the moment to scale down our positions.”

Shale oil boom in the United States, which is producing oil at the peak since 1986, has drastically changed the global oil market landscape and dampened prices.

Just two days prior to the OPEC meeting in Vienna, Russia sent its delegation, led by Igor Sechin, a long standing ally of President Vladimir Putin and head of Russia’s top oil producer Rosneft, to the Austrian capital for meetings with some OPEC members.

Shuvalov said, however, that Russia did not ask OPEC for production cuts.

Russian experts say its is hard for the country to cut its production suddenly as its harsh climate and challenging geology means it cannot simply stop wells from pumping oil.

Russia expects to keep its production stable next year at over 10 million barrels per day.