The Global Petroleum Perspective.

Whether a paper WTI price above $80/b will affect the global economy has become a universal question. Paper oil prices are influenced more by the level of the US dollar than by all other factors. When the dollar rises, paper oil prices fall, and vice-versa. This affects the pricing of crude oil across the globe (see omt13SaudiProspSep28-09).

Having surpassed Saudi Arabia as the world's largest crude oil producer, Russia expects to top record 2009 output next year due to production from new oilfields. Russia's Deputy Energy Minister Sergei Kudryashov on Oct. 27 forecast 2010 production would be more than 490m tons, the official output forecast for 2009. He said: "This has been written into the budget". With new fields in the Arctic and East Siberia, Russia's cruder oil output has shot past 2008's yearly production of 488m tons. The Russian government, meanwhile, relies on oil exports for about 40% of its budget. Kudryashov said: "Based on the results of the first nine months, you could say we've managed to buck the downward trend in oil production seen in 2008. Despite the financial crisis, we've managed to prevent investment in the sector from falling and retained targeted investment in certain projects". He said oil output might even beat forecasts by end-2009.

Only months ago, the Kremlin suggested it would co-ordinate output cuts with OPEC in a bid to bolster the global price of crude oil, which collapsed from paper WTI's July 11, 2008 peak of $147.27/b. But as its oil producers hit trouble amid the world's financial crisis, Russia took an aggressively different tack by easing the sector's taxes and encouraging producers to snatch the gap in the market opened by OPEC's cuts. Russia's crude oil output hit a record high of 9.9m b/d in August.

OPEC has invited Moscow to its next ministerial conference in Angola in December. Energy Minister Sergei Shmatko on Oct. 27 said Russia and OPEC planned a joint meeting ahead of the Angola conference to discuss an MoU proposed in 2008 by Moscow. Russian output reached 9.86m b/d in July and 9.51m b/d in June. In comparison, Saudi Arabia produced 8m b/d over the same period, according to the Russian state statistics agency.