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  • Will Opec and Russia join forces to cut oil production?

  • The market is buzzing with talk that Opec and Russia could strike a deal

  • to pull barrels from a heavily oversupplied oil market.

  • Comments this week from Russia's energy minister

  • that he's ready to meet with Opec countries to discuss the production card

  • has triggered a large move in oil prices which have now risen more than 20% since last Wednesday.

  • How willing are Opec members to make a move?

  • Well, Opec's kingpin and de facto leader Saudi Arabia has a very clear stance on this.

  • It will cut production, but only if it's joined by other members of the cartel,

  • and other big producers such as Russia.

  • So will Russia cut production?

  • Well, the most important figure in the country's oil industry is Igor Sechin.

  • The chief executive of Rosneft, and a close confidant of President Putin.

  • In the past, he shot down speculation of coordinated cuts time and again.

  • First, he says Russian energy companies have to answer to shareholders

  • and cannot simply cut production just because they're ordered to by the Kremlin.

  • Second, he says the harsh winters in Russia make it very difficult to shut in production.

  • Now, it's worth noting that Mr. Sechin was absent from all of this week's meetings

  • between big Russian energy companies and the government.

  • Could there be other motives at play here?

  • Now, it could be that this week's statements in the talks between the Russian oil companies and the government

  • are nothing more than attempting to jawbone the market and prevent another collapse in the oil prices.

  • At a time when Iran is supposed to come back from sanctions and put more oil into the market

  • and there are many refineries closed for maintenance period.

  • What's the market impact?

  • The pay inflicted by lower prices that now have fallen more than 70% since the middle of 2014 is extreme.

  • In Russia, the Ruble has slumped to a record low

  • and government is scrambling to plug a huge hole in its budget deficit.

  • Even Saudi Arabia is suffering, its currency is under pressure

  • and it too has a budget deficit that is blown out to a record hundred billion.

  • So, perhaps the pain of lower oil prices will be enough to focus minds

  • and get a deal over the table.

Will Opec and Russia join forces to cut oil production?

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