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.

Follow us on Twitter: @SteppeDispatch

News Briefs:

  • Ukraine started a trade dispute against Russia in the World Trade Organization (WTO). Ukraine has taken issue with Russian restrictions on Ukrainian-made railway equipment that Kiev alleges have been in place since 2013. Ukraine further noted that imposed restrictions not only broke WTO rules but that Russia has in effect banned all Ukrainian imports.Russia recently released a statement on how it will prepare to deal with the Ukrainian complaint.
  • Sputniknews reports on the arrival of Iranian warships to the Russian shelf of the Caspian. Three Iranian warships including two missile boats, Paykan and Joshan, and the Damavand destroyer will remain in Astrakhan for joint naval exercises. The former two boats already visited Astrakhan back in 2013, whereas the Damavand is the Iran’s newest destroyer that joined the fleet in March 2015 and has already participated in joint-training with Russian Caspian Fleet at Bandar-e Anzali in August. After the exercises, Iranian fleet is set to visit Azerbaijan.
  • Iran’s supreme leader Ayatollah Ali Khamenei approved the nuclear deal with the P5+1, meaning the last procedural hurdle has been overcome for carrying out the deal. Khamenei’s green light was, however, followed by the Ayatollah’s urging that Iran should not give up core elements of its atomic program until past military allegations are resolved. He also ruled out any other détente with the western powers and threatened to case he deal’s implementation if any of the six powers introduce new sanctions. Khamenei also called on tight control and monitoring of the deal because of its vague elements and ambiguities.
  • The USA shipped two modified radar systems to Ukraine with expected arrival in mid-November at Ukraine’s Yavoriv training ground. President Barack Obama signed the order on shipment of AN/TPQ-36 counter-artillery radars, each worth $10 million back in September. The radars serve to stop artillery and rocket attacks by the separatists, rather than counter them, which drew Republican critiques that the US is mollifying Russia. They accused Obama of appeasing Putin by only providing nonlethal defense material rather than offensive weaponry.
  • Kazakhstan and US agree on further cooperation in nuclear fuel supply. Kazakh company KazAtomProm and Centrus Energy signed a memorandum on collaboration in supplying Kazakh uranium to the world market during Askar Zhumagaliyev’s (head of KazAtopProm) visit to Washington. KazAtomProm is the largest uranium producer in the world, while Centrus Energy supplies enriched uranium for commercial nuclear power plants in the USA and beyond. In fact, last year Kazakhstan became the leading supplier of uranium to the US sharing 23% of its uranium market and respectively overtaking Australia and Canada.
  • Human Rights Watch memorandum summed up human rights concerns in Central Asia. Human rights condition remains fairly atrocious all over the region with a slight difference for Kyrgyzstan. The country stands out for its parliamentary democracy and was praised for competitive parliamentary elections early this month, however, still with considerable human right abuses of ethnic and sexual minorities groups, as well as in terms of gender-based and domestic violence problems. The same rationale applies to other Central Asian countries, which drew criticism for abuse of freedom of speech, public assembly, rights of religious minority groups, suppressing opposition activities as well as freedom of media and critical information.