Russia and Kazakhstan in talks with OPEC countries over oil prices

In response to sagging oil prices, the Organization of the Petroleum Export Countries (OPEC) held a meeting in Vienna first time with eight non-member states including Russia and Kazakhstan. Previously, Russia and some other oil producers refused to work with OPEC.  Participation from Russia, Kazakhstan, Mexico, Colombia and Brazil created the hope that they may assist in taking measures to deal with the global downturn in oil prices. In a proposal to raise prices to $88 a barrel, Venezuela appealed to cut oil production, citing current per-barrel prices of less than $40. However, the meeting did not produce an agreement. Non-OPEC members refused to cut oil production in order to reduce surplus that in fact reduced oil prices more than twice (from $114 to $50 a barrel) since July of last year. Meanwhile, OPEC has refrained from cutting supply alone, and some of its members have in fact raised output. An additional meeting will be held in a month.

Disagreements notwithstanding, increased participation in OPEC meetings highlights the growing importance of oil prices for the two largest former Soviet Union oil-producing countries, Russia and Kyrgyzstan. Kazakhstan believes to be facing a bigger crisis than back in 2007-2009 due to falling prices in the global market as its revenue budget has dropped by 40%. The Russian economy has also respectively crumbled alongside drastic changes in oil prices as its energy exports make up 65% of all exports, according to the IMF. The perceived Russia-Saudi Arabia contest for market share is also seen as a major obstacle for Russia’s reluctance to join OPEC. However, major sufferings at the global market might lead Russia and OPEC to team up.

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News Briefs:

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