ST. PETERSBURG: President Vladimir Putin said on Thursday that 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 the 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.

OPEC 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 percent of global output, from Jan. 1 until the end of June to support oil prices and balance the global crude market.

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

Speaking at a gathering with the foreign media in St. Petersburg, Putin said that he would not reveal what Russia and its partners would do on the oil market in the second half of the year, but said that 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 organization’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 more than $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. 

Meanwhile, Russia’s second-biggest oil producer Lukoil plans to propose that Moscow extend its participation in a global oil production-cutting deal at
existing terms to the end of this year, its chief executive Vagit Alekperov said.

“I will propose maintaining the deal and monitoring (global oil) inventories, excluding Iran,” Alekperov said, referring to an increase in oil prices.