Putin says Russia disagrees with OPEC on fair oil price

President Vladimir Putin said on Thursday Russia had differences with OPEC over what constituted a fair price for oil, but that Moscow would take a joint decision on output with OPEC colleagues at a policy meeting in the coming weeks.

Putin’s comments have set a stage for tough talks between Russia and its partners over their policy on the global oil market, which are expected to take place within a month.

The Organization of the Petroleum Exporting Countries and large oil producers led by Russia are due to meet in Vienna in the end of June or early July to decide on their policy for the next half of the year as the current deal expires.

They have agreed to cut their combined production by 1.2 million barrels per day, or more than 1% of global output, from Jan. 1 until the end of June in order to support oil prices and balance the global crude market.

Russia joined the efforts with the OPEC in 2016 and their cooperation has helped to stabilise oil pieces and ease an overhang of stockpiles.

Speaking at a gathering with the foreign media in St Petersburg, Putin said he would not reveal what Russia and its partners would do on the oil market in the second half of the year, but said several factors, including higher oil demand in the summer should be taken into account.

Putin also pledged to continue cooperation with OPEC, though Russia and the organisation’s kingpin, Saudi Arabia, have certain differences on so-called “fair price” of oil.

“This is natural”, said Putin. “Look at the price of a barrel, which Saudi Arabia uses to calculate its budget. This is significantly higher than for us,” Putin said, adding that Russian budget implied an oil price of $40 per barrel.

According to an International Monetary Fund official, Saudi Arabia would need oil priced at $80-$85 a barrel to balance its budget this year. Oil prices are trading at over $60 per barrel, pressured by global trade disputes.

Putin said a price of $60-$65 a barrel suited Moscow and that the decision by OPEC and its oil exporting allies should also take into account the decline in production in Iran and Venezuela, and problems in Libya and Nigeria.