The United States could ask Russia to boost oil production to avoid a global crude shortage with Washington about to reinstate economic sanctions against Tehran, CNBC reports.
Last week, OPEC and non-member allies agreed to add one million barrels per day to the market despite opposition by Iran. Russia had reportedly insisted on 1.5 million pbd output increase. Russian Energy Minister Aleksandr Novak told CNBC that the hike was sufficient for now.
US Energy Secretary Rick Perry told reporters Monday the agreement “may be a little short” of what is needed to prevent shortages coming from sanctions against OPEC’s third largest producer. Sanctions against Iran could result in up to 1 million pbd oil deficit on the market, BP CEO Bob Dudley said in May.
Russian Energy Minister Novak is on his way to Washington to attend the World Gas Conference where he will meet his US counterpart. According to CNBC, analysts say Perry may ask Russia to pump more oil to make up for the shortfall on the market once sanctions against Iran are in place.
Two years ago, when OPEC, Russia and other producers cut production by 1.8 million bpd, Moscow agreed to slash its output by 300,000 bpd. The last week’s deal will return two thirds of the Russian production cut.
Iran was against brokering the deal to ramp up production since it can’t do it at the time of sanctions. However, Russia is said to have managed to sway Tehran in hard talks with Saudi Arabia. Analysts have said Russia is a crucial link in oil talks between Iran and its nemesis.
“This is why Russia is a critical part of this whole thing,” Michael Cohen, head of commodities research at Barclays told CNBC. “Without Russia … the link isn’t there.”
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