2-IN-1 STORY: Russia, OPEC Hint At Oil Production Cuts

© Sergei Karpukhin / Reuters

Both Russia and OPEC have separately implied they are ready to cut crude output amid collapsing prices.

RT report continues:

According to Russian Deputy Prime Minister Arkady Dvorkovich, Moscow has the instruments to keep the oil output at the current level, but the prices could take a toll.“If prices remain low for a long time, a production cut is possible. This is what our partners - other countries – know,” he said on Tuesday. 

Dvorkovich added that after a period of low investment in this area in the whole world, "oil prices will almost inevitably rise, but to what level - no one knows, and then production will begin to grow again."

This came as OPEC Governor Nawal al-Fuzaia hinted on Tuesday that OPEC is ready to cut production in an effort to slow down the plunge in oil prices. The governor told an energy forum in Kuwait that OPEC is ready to "cooperate" with others to stabilize the crude market.

"OPEC is willing to cooperate with producers outside the group if they show that they are serious about cooperating with OPEC. Non-OPEC producers keep on making statements that they are willing to cooperate, but the reality is different," she said, quoted by Dow Jones Newswires.

Al-Fuzaia also said prices are unlikely to rebound to the highs of 2014, but still could grow to US$40-US$60 per barrel through 2020.

Brent crude was trading at US$30.67 per barrel, while West Texas Intermediate stood at US$30.62 as of 2:15pm GMT Tuesday.

© Faisal Nasser / Reuters

Saudi Arabia Says It Can Move Beyond Crude

RT reports that Riyadh has outlined an ambitious economic development plan aimed at dramatically reducing its dependence on crude prices, Reuters reports. Last year Saudi Arabia saw a US$98 billion deficit because of low oil prices.

The authorities intend to restructure the economy by investing more in other sectors, particularly in healthcare, tourism and IT. Saudi Arabia also says it intends to liberalize the market in order to attract foreign investors.

"It's going to switch from simple quantitative growth based on commodity exports to qualitative growth that is evenly distributed across the economy,” said Khalid al-Falih, chairman of national oil company Saudi Aramco.

Commerce and Industry Minister Tawfiq al-Rabiah said Saudi Arabia had been a victim of the so-called "Dutch disease" - total dependence on oil in the economy - but is now trying to change that.

Saudi Arabia had US$628 billion in reserves in November, but analyst doubt Riyadh’s ability to implement the changes, as almost two-thirds of local workers are in the public sector.

"The transition away from being a renter state is not a comfortable one,” David Chaudron, managing partner of the California-based Organized Change Consultancy told Reuters.

"They’re trying. But the fundamental question is: will their trying bear enough fruit before the downside of the current system hits? Or is it a day late and a dollar short? Will the forces of change ultimately be enough to overcome the inertia of the current system? I don’t know,” he added.

Saudi Arabia, the leading country in OPEC, is considered by some to be the main culprit behind the crude price collapse. The Kingdom refuses to cut crude production despite the supply glut on the global market.

Prices have fallen from US$115 in July 2014 to about US$30 per barrel on Tuesday.