Russia has agreed to cut its oil exports by 150,000 barrels a day beginning January 1. The announcement comes amid pressure by the Organization of Petroleum Exporting Countries (OPEC) to cut supplies in order to raise prices on the world market.
Russia's decision to reduce exports came after negotiations between the government and the country's top oil executives. Prime Minister Mikhail Kasyanov said various factors were taken into consideration, including world prices and demand.
He said the decision is in the interests of both the government and the oil companies. He also said he hoped suppliers would stick to the agreement worked out.
A global economic slowdown, accelerated by the September 11 terrorist attacks in the United States, has led to a sharp decline in world oil prices. OPEC countries have already reduced their output by 3.5 million barrels a day this year and last month announced another cut of 1.5 million barrels in January. The cartel has been pressuring non-OPEC producers, such as Russia, Norway and Mexico, to take similar measures in order to stabilize the world market.
But Russian companies, eager to take advantage of the OPEC cuts to increase their share of the world market, were at first reluctant to cut production.
But after negotiations with the government, the companies announced a reduction of 50,000 barrels a day, but that was considered too little to stabilize prices. However, the negotiated cuts for January are expected to go a long way to satisfy OPEC demands. OPEC members Saudi Arabia and Kuwait have welcomed the Russian decision, Norway said the announcement was positive and markets responded with a rise in prices by early afternoon.
Russia is the world's second largest oil producer after Saudi Arabia.