Moscow — Russian President Vladimir Putin said Sunday that current oil prices are acceptable for Russia and he backed continued cooperation through the OPEC+ agreement to ensure market stability and combat the negative impact of the coronavirus outbreak on the global economy.
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"I want to emphasize, for the Russian budget, for our economy, current oil prices are acceptable. Let me remind you that this year, as part of our macroeconomic policy, we took a Brent crude price of $42.40/b as the base level," Putin said during a meeting on the impact of the coronavirus on the global economy and the oil market with government ministers and representative of oil and gas companies.
"Moreover, our accumulated reserves, including the National Welfare Fund, are sufficient to ensure stability, and meet all budget and social obligations even with a possible deterioration of the situation in the global economy," he added, according to a transcript of the meeting posted on the Kremlin website.
Crude oil futures settled at fresh 14-month lows Friday as the continued global spread of coronavirus fed fears of flattening demand and raised the specter of economic downturn. ICE April Brent settled $1.66 lower at $50.52/b. NYMEX April WTI was $2.33 lower at $44.76/b at market close.
Putin said that Russia's international reserves are $563 billion, and there is a further $124 billion in the National Welfare Fund.
"Nevertheless, this does not negate the need for us to take action, including in conjunction with foreign partners," he said.
Putin described the OPEC+ agreement as an effective tool to ensure long-term stability in global energy markets.
"Due to this, we received additional budget revenues and, importantly, enabled our producers to confidently invest in promising development projects," he said.
Beyond officials backing ongoing cooperation, Russia has yet to provide a detailed position on the OPEC+ agreement going forward. Earlier this month Russian oil producers indicated that they would be willing to extend the current agreement to the end of the second quarter but do not want to cut further.
Some participants in the deal have called for deeper cuts in response to the market impact of the coronavirus outbreak. The group will meet in Vienna March 5-6 to discuss the market situation and future action. The current 1.7 million b/d supply cut agreement expires at the end of March.
Putin added that although current conditions are acceptable, the situation continues to be unpredictable and Russia needs to be prepared.
"Of course, today it is difficult to predict how long-term this trend will be, but in any case, it is important for us to be prepared for various scenarios," Putin added.
He described last week as the worst for global markets since the 2008 crisis.
"The negative consequences are already making themselves known, and are affecting the entire system of global economic relations, almost all states, given the current high interdependence and interconnectedness of economies," Putin said.