Russia May Cut Oil Output

Russian oil companies could cut output if crude prices stay at current levels, Russia's energy minister has said.

But it would be up to them, not to the government, to make the decision, Sergei Shmatko said about a possibility of Russia joining Opec production cuts.

He said that the supply level was not the only key factor that influences the market's mood.

Oil should cost no less than $60 to suit both producers and consumers, Mr Shmatko said.

Russia, which is not a member of the Opec oil cartel, is one of the world's leading oil exporters.

Some major oil companies in the country are controlled by the government.

The situation today is that many countries are on the brink of production profitability.

Russia's Ural crude oil costs less than $50 per barrel, while the Russian budget assumption for this year is $75 a barrel and for $95 a barrel in 2009.

"Almost all Opec members... probably with the exception of Saudi Arabia, are seriously unhappy about the current oil price levels," Mr Shmatko said.

"The situation today is that many countries are on the brink of production profitability."

Opec, which controls 40% of the world's oil supply, agreed on a 1.5 million barrel-a-day reduction last month.

Now analysts are guessing whether the cartel will cut output again at its meeting later this month.

On Monday Opec's president downplayed the chance of a November output cut.

Russia has been criticised by some analysts for increasing output for several years while Opec was cutting production to support oil prices.

But Moscow has so far resisted calls to join the cartel's cuts.

"A cut is a serious issue," Mr Shmatko said.

"Our strategy consists of checking our investment programmes together with other producers and show the market that a substantial drop in production is possible if there are no fair prices."

Author: Jo Amey