This Reuters article provides confirmation that Russia’s opportunistic attempts to use OPEC to advance its own interests (opportunism analyzed in detail in several SWP points) have left the oil cartel spitting mad:
Russia is no longer a welcome guest of OPEC after boosting its production to levels far above those pumped by the group’s biggest exporter, Saudi Arabia, and snatching away market share.
After flirting with OPEC when a barrel of oil cost less than $40, Moscow has once more set its course on raising production to support an economy entering its first recession in a decade, leaving OPEC to shoulder the burden of record output cuts.
“OPEC members have cut almost 4 million barrels per day in order to subsidize the Russian oil industry and economy to the tune of about $150 million per day,” said Chris Weafer, chief strategist at UralSib investment bank.
“This is unlikely to sit well with OPEC member countries.”
. . . .
Senior Russian government officials have attended the last few gatherings, while producers, including the largest independent oil firm LUKOIL (LKOH.MM), had signaled they might be willing to cut output.
Yet Russian oil production rose in April to 9.85 million bpd — 1.3 percent more than the 9.72 million bpd produced in February.
Saudi Arabia, the world’s top exporter, has been pumping less than 8.05 million bpd since February as it accounts for the bulk of OPEC’s cuts.
“Russia, rather than cutting exports, has now increased exports of oil products at a time when OPEC supplies are at their lowest in five years,” said Valery Nesterov, oil and gas analyst at Russian investment bank Troika Dialog.
While OPEC has cut output by about 5 million barrels per day since last July, Russia has increased the supply of oil and oil products by 6.4 percent, or 0.45 million bpd, Nesterov said.
“In other words, Russia has compensated for about 10 percent of the cuts made by OPEC.”
The Russian response? A real howler:
Russian officials said they were not invited to this week’s OPEC meeting, but say their absence is not political.
“It has nothing to do with the rising oil prices. There are some organizational issues,” Anatoly Yankovsky, Russia’s deputy energy minister, told Reuters. Another ministry official said OPEC called Russia to its meetings as an observer during crises in global oil markets. “OPEC now considers that the situation is stable,” he said.
Yeah. There are some organizational issues. Like, the organization in question has had enough of Russia’s BS, and is not going to be played for chumps again by Igor Sechin.
Now, I detest OPEC, and attempts to cut output collusively to prop up prices above the competitive level. So, in that sense, it is a good thing that Russia cranked up output in response to OPEC cuts. Though I know that Russia’s actions had nothing to do with any commitment to competition or any aversion to anti-competitive tactics.
That said, I still find this dispute among thieves to be quite illuminating. In particular, it casts a glaring light on the duplicity and opportunism that characterizes the actions of the siloviki that dominate the Russian energy business, and hence, by extension, the Russian government. OPEC has found to its dismay (but to the joy of energy consumers) that Russian declarations of solidarity and cooperation are intended primarily to gull the credulous, and that such whispered sweet nothings are completely incredible. Chumming for chumps. This has implications that extend far beyond Russia’s dealings with OPEC. In particular, it seriously undermines the case for a “realist” “reset” with Russia; what’s the point of negotiating grand bargains with such bald faced opportunists and liars?