Russia Joins The Oil Price Blame Game, and Says OPEC+ Output Can be Quickly Raised

No plans to raise oil output, says Iraq. File Image / Pixabay

While fearful analysts in the west inspire traders to push crude prices ever higher in anticipation of a global tightening due to the drop of Iran exports under the U.S. sanctions, in the eastern half of the world, the general sentiment seems to be - at least, as far as Iraq is concerned - that there's no need to rush headlong into extra production.

Jabar al-Luaibi, oil minister for Iraq, said on Wednesday in response to a question about whether the Organization of the Petroleum Exporting Countries (OPEC) should increase output to counter the current high prices: "We will see in November; we have not reviewed the increase of production so far."

Russian spokesmen seemed equally unfazed by the current state of the crude market: Kirill Dmitriev, the chief executive of the Russian Direct Investment Fund, told CNBC on Wednesday that "Cooperation with OPEC is not only an agreement to increase prices, it is an agreement to stabilize prices; so, if prices become too high, then both Saudi Arabia and us have the capability and capacity to increase production."

He added, "Russia is not really interested in incredibly high oil prices, we actually feel that the current level is even (too) high and maybe should be a little bit lower."

Supporting the sanguine mood in the former Soviet Union was energy minister Alexander Novak, who on Wednesday said his country hasn't reached peak output: "We are expecting this year around 555 million tonnes [of oil production]; in our forecasts we can increase output while production-stimulating measures are being discussed."

However, there was a sense of aggravation over the high crude prices, and Russian president Vladimir Putin on Wednesday expressed it by remarking that it would be better if U.S. president Donald Trump did not intervene to try to manage oil markets via his sanctions against Iran.

Meanwhile, Mohammed Bin Saleh Al-Sada, minister of energy and industry for Qatar, was busy Wednesday defending OPEC against Trump's repeated charge that the cartel is manipulating oil prices.

He said, "OPEC is not trying to manipulate the price, it's trying to bring the market to balance."

No doubt to the consternation of emerging but fragile economies such as that of India, he went on to argue that  low oil prices do not necessarily have a beneficial impact on global economic growth: "When OPEC took the measure to restrict the production from its end, as well as some allied (oil producing) countries, it was meant to shave the extra excessive stock which was at a record high that was depressing the oil price; that depression of the oil price led to what, [Did it] lead to a better world economy?

"In fact, there was the worst record for the global economy during that downturn in the oil price."

The energy minister added, "Now during the journey of the recovery in the oil price looks what happened - the balance [in the market] between supply and demand has taken place, the world economy is at its best now."

Barclays is one of the few analytical organizations in the west that has expressed confidence in OPEC compensating for Iran's shortfall: earlier this week it said the cartel "has ample spare capacity"and that "softening demand growth and new supply should cool the bullish sentiment and push prices lower by the end of the year."