Sechin, the head of state oil company Rosneft and a close ally of
Russian President Vladimir Putin, is expected to meet OPEC officials
amid hints from Moscow that Russia could cut output or exports if
the producer group does the same.
Oil prices have fallen 30 percent since June to around $80 per
barrel as a global oil glut has built up on the back of a U.S. shale
boom and lower global demand because of slower economic growth in
China and Europe.
Current prices are far below what most OPEC members and rival
producers such as Russia need to balance their budgets.
Oil market watchers are divided on the outcome of OPEC's meeting
this Thursday in the Austrian capital. Predictions range from a
large production cut to revive prices, to a small reduction, or none
Some analysts say an OPEC cut of as much as 1.5 million barrels per
day (bpd) is needed to support oil prices and avoid a glut
aggravating in the first half of 2015.
However, Saudi Arabia has kept the market guessing in recent weeks
about its intentions.
Diplomatic and market sources say Saudi officials told briefings in
recent months that the kingdom, with its large currency reserves,
was prepared to withstand oil prices as low as $70-$80 per barrel
for up to a year.
When Saudi Oil Minister Ali al-Naimi spoke earlier this month after
weeks of silence, he said Riyadh's desire for stable markets had not
changed but gave no clue about his potential response.
"Although the objectives of the cartel are unclear today, what is
apparent is that investors and companies are being shocked out of
the $100 per barrel oil comfort range of the last four years and
that volatility looks set to remain a feature in 2015," analysts
from Barclays wrote on Tuesday.
In Vienna on Monday and Tuesday, Naimi brushed off reporters'
questions about oil prices and surplus supplies. "This is not the
first time the market is oversupplied," he said.
The fact that Naimi arrived three days before Thursday's meeting
indicates he is gearing up for long talks with fellow ministers and
possibly Sechin, who has been targeted by U.S. sanctions over
Russia's actions in Ukraine.
The delegations of Venezuela and Iran, usually seen as price hawks,
have asked to meet Naimi on Tuesday, an OPEC source said.
Russia's Kommersant newspaper cited sources on Monday as saying
Russia might suggest cutting its oil production by around 300,000
bpd from next year and that Moscow expected OPEC to limit its output
by another 1.4 million bpd.
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If Russia were to agree to cut production, it would effectively side
with OPEC hawks, which have been putting pressure on Saudi Arabia to
Moscow's relations with OPEC were soured by the country's pledge to
cut output in tandem with the group in the early 2000s -- Russia
failed to follow through, and raised exports instead.
Analysts are sceptical Moscow can offer anything significant this
"Russia’s overtures to OPEC ... are not particularly credible,"
analysts from Commerzbank said, adding that Western sanctions on
Russia made it difficult for the country to increase output anyway.
Iranian news agency Shana said Putin and Iranian President Hassan
Rouhani spoke by telephone on Monday evening and agreed "on
necessary cooperation in favour of oil markets".
The agency did not say where it acquired the information. On Monday,
the Kremlin said the presidents discussed Iranian nuclear talks and
bilateral issues and made no mention of oil.
On Monday, Iran and six world powers agreed to yet another extension
in the talks aimed at resolving a 12-year-old dispute over Tehran's
nuclear programme until June 30, 2015.
That made very unlikely any quick revival in Iran's oil exports and
removed a potential layer of complication to this week's OPEC
Ratings agency Fitch said on Tuesday lower oil prices pose the
greatest risk to the credit profiles of sovereigns such as Bahrain,
Angola, Venezuela and Ecuador, with the least vulnerable being
Kuwait, Abu Dhabi, and Norway.
(Additional reporting by Alex Lawler, David Sheppard and Shadia
Nasralla; Writing by Dmitry Zhdannikov; Editing by Dale Hudson)
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