Moscow — OPEC, Russia and its allies may consider a range of proposals to increasecrude oil output which could be by as much as 1.8 million b/d, according to asource familiar with the matter.
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* Raising output by 1.8 million b/d among proposals: source
* Putin, Saudi crown prince to meet Thursday ahead of World Cup opener
* Russian companies say output boosts can happen quickly
Russia will propose that participants in the OPEC/non-OPEC production cutdeal be allowed a "proportional increase" in output to moderate oil prices andfill any supply, a source told S&P Global Platts.
Such moves would still result in a net 1 million b/d supply cut asparticipants have actually lowered output by 2.8 million b/d, largely due toVenezuela's involuntarily free-falling production, the source said.
The production cut agreement, which went into force in January 2017,called for a 1.8 million b/d cut from October 2016 levels.
Russia's President Vladimir Putin is expected to discuss the deal withSaudi Arabia's Crown Prince Mohammed bin Salman Thursday, ahead of the WorldCup opening ceremony and match between the two countries.
Russia's cooperation with the OPEC coalition will be among the meeting'sagenda items, Putin's spokesman, Dmitry Peskov, said Wednesday, according tothe country's RIA Novosti news agency. But a gradual withdrawal from the dealis not on the agenda, he added.
Saudi energy minister Khalid al-Falih and his Russian counterpartAlexander Novak, are also expected to meet during the visit to discuss theoutput cut agreement.
The Russian-Saudi meeting will occur just days before OPEC gathers onJune 22 in Vienna to review its supply cut agreement with key non-OPECproducers led by Russia.
And it comes as US President Donald Trump lobbies OPEC to lower oilprices, which, for the second time on Twitter, he has said are "too high."
"OPEC is at it again. Not good!" Trump tweeted Wednesday.
Iran, Venezuela and Iraq have voiced opposition to suggestions that OPECraises its output.
The Russian energy ministry declined to comment, while Novak haspreviously said repeatedly that a proportional increase in quotas would belogical if the coalition decides to raise crude production.
In late May, Falih and Novak both said the OPEC-led coalition could startgradually raising oil production as early as the third quarter, after pricesrose above $80/b.
Russian production stood at 11.2 million b/d in October 2016, while Saudioutput was 10.5 million b/d. OPEC as a whole produced 31 million b/d inOctober 2016, not including Indonesia, which suspended its membership inNovember 2016, and Equatorial Guinea, which joined the organization in May2017.
RUSSIAN PRODUCERS READY FOR RISE
Russia's oil producers have also called for "flexible" quotas recently asthe key goal of the agreement -- to bring OECD commercial oil inventories downto the five-year average -- has been achieved.
Russia had never previously reduced its production intentionally, so itremains unclear how much time it would need to restore the output.
Rosneft has said it could fully recover the 100,000 b/d it cut in linewith the agreement within two months if the terms were lifted.
In tests carried out over three days, the company boosted output by57,000 b/d on day one, 70,000 b/d on day two, and an expected 80,000-85,000b/d on day three, Aton analysts said earlier this month, after meeting withRosneft's top officials.
Lukoil's CEO Vagit Alekperov also spoke in favor of reconsidering theoutput limits due to "already high" oil prices, while Gazprom Neft FirstDeputy CEO Vadim Yakovlev said his company is prepared to restore itsproduction, which was reduced by about 34,000 b/d, within a month or two.
PRICE UNDER SCRUTINY
Russia has received significant additional earnings from a 40% increasein oil prices over the course of the production cut deal. Current oil prices,though, seem too high and unstable for Russia as they pose risks of new pricehikes and also add pressure on the domestic market.
Russia has recently faced a significant jump in domestic motor fuelprices, which has raised nationwide concern ahead of the high-demandharvesting season, with the authorities even warning they would need toincrease export duty for oil products to limit deliveries to internationalmarkets.
The situation has improved slightly recently as the cut in oil prices byaround $5/b from $80/b in late May increases the profitability of domesticrefining and reduces the attractiveness of "the export alternative," Novaksaid Wednesday.
"If the trend persists and prices reach, say, $70/b on internationalmarkets, then [the domestic] situation may fully stabilize," he said.
President Putin in late May said Russia could be comfortable with an oilprice of $60/b as this level allowed the country to plan and implementinvestment, adding it was not interested in ever rising prices because thesecould cause problems for customers.
--Nadia Rodova, with Herman Wang in London, email@example.com
--Edited by James Leech, firstname.lastname@example.org