Putin, Maduro Discuss Oil Markets As Support For Output Cut Extension Grows

Russian President Vladimir Putin and Venezuela’s President Nicolas Maduro discussed the global oil markets situation in a telephone call at Venezuela’s initiative, the Kremlin said on Thursday, as support for the extension of the OPEC/non-OPEC production cuts seems to be growing by the day.

On Monday, Saudi Oil Minister Khalid al-Falih and Russian Energy Minister Alexander Novak said that OPEC and Russia had agreed to extend the oil production cut deal struck at the end of last year until March 2018.

Support for the extension has grown since then, and according to Algeria’s Energy Minister Noureddine Boutarfa, most signatories to the deal are backing the Saudi-Russian proposal.

OPEC member Venezuela officially said on Tuesday that it is supporting the proposal for a nine-month extension of the deal.

In the phone call, Putin and Maduro discussed the global oil market, including in the context of the implementation of the OPEC/non-OPEC deal to curb production, the Kremlin press statement said.

The two leaders also discussed Russian-Venezuelan strategic partnership and mutually beneficial projects in various industries.

In a separate Russian-Venezuelan development, Rosneft CEO Igor Sechin said on Thursday that the Russian oil giant received a stake in Citgo, the U.S. refining and marketing unit of embattled Venezuelan state company PDVSA, as collateral when the Russian company made pre-payment to the Venezuelan group for oil supplies.

Related: From Oil To Arms: Saudis Move Away From Crude

There is concern that in case PDVSA defaults on debt payments, Rosneft could take control of 49.9 percent of US-based Citgo.

Hyperinflation, street protests, food and medicine shortages, and a collapsed economy while Maduro is clinging to power are driving PDVSA and Venezuela closer to default. The country’s oil production is set on a continuous decline and gasoline is running low as PDVSA is unable to operate normally with the huge debts it has been amassing.

By Tsvetana Paraskova for Oilprice.com

More Top Reads From Oilprice.com:

• Venezuela’s Oil Production On The Brink Of Collapse
• Iran’s Elections Could Disrupt Oil Markets
• Russia Reemerges As China’s Top Crude Supplier