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Russia, Venezuela Seek to Combat Oil Price Woes

  • Reuters

FILE - An oil pump is seen in Lagunillas, Ciudad Ojeda, in the state of Zulia, Venezuela, March 18, 2015.

FILE - An oil pump is seen in Lagunillas, Ciudad Ojeda, in the state of Zulia, Venezuela, March 18, 2015.

Russia and Venezuela need to combine efforts to lift oil prices, President Vladimir Putin told his Venezuelan counterpart Nicolas Maduro on Thursday, but refused to spell out any specific action, including output cuts.

Maduro, who met Putin in Beijing after attending a Chinese military parade to mark 70 years since the end of World War II in Asia, spoke of some "initiatives" agreed between the pair, but did not specify what those might be.

The economies of both Russia and Venezuela, two major producers, are highly dependent on proceeds from the sale of oil, the price of which has roughly halved since last year due to oversupply and a decision by the OPEC cartel not to cut production.

"Both parties noted during the meeting that such unstable oil prices are not in the interests of the two countries and, of course, the countries should integrate their efforts in terms of coordination to facilitate a boost in oil prices," Kremlin spokesman Dmitry Peskov told reporters. "However, President Putin drew attention to the fact that there could be no direct actions, this is a market process… There are lots of factors which are having an impact and that should be taken into consideration very carefully."

Maduro, who often puts a positive spin on the results of Venezuelan lobbying of OPEC, said he and Putin had made some progress.

"The initiatives will be known once they are in full swing," state news agency AVN quoted Maduro as saying to Russian television network RT, without providing further details.

Venezuela is a member of OPEC, but Russia is not.

Moscow has so far been unwilling to deliberately cut its crude oil output to support prices, and the meeting of Putin and Maduro had not been expected to yield any concrete results, a senior Russian source told Reuters on Wednesday.

The Organization of the Petroleum Exporting Countries' (OPEC) relatively wealthy members in the Gulf drove the group's strategy shift last year to allow prices to fall to defend market share.

But a severe recession and shortages of consumer goods in cash-strapped Venezuela have whetted the government's appetite for higher oil prices. It has been pushing for a new deal between OPEC and non-member producers to stabilize prices.

Russia has been ramping up output this year, extracting it at a post-Soviet record high of around 10.7 million barrels per day.

Moscow wants to keep production high to defend its market share, and if it cut output it would, in the short term at least, lose revenue that it relies on heavily for its budget.

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