Oil retreats after head of Russia’s Rosneft says it won’t back OPEC production cut or freeze

A day after oil prices hit highs not seen in at least a year, crude made a retreat after the head of a major Russian oil company said he won’t go along with an OPEC plan to cap output,.

Russia’s most influential oil executive, Igor Sechin, the head of Rosneft, told Reuters that his company will not cut or freeze oil production as part of a possible deal with OPEC.

“Why should we do it?” Sechin told Reuters in Istanbul on Monday evening when he was asked if the company will cap its output. Rosneft accounts for about 40 per cent of Russia’s crude oil output.

Following Sechin’s remarks, West Texas Intermediate for November traded down 65 cents at $50.70 US per barrel. On Monday, WTI settled at $51.35 US a barrel, its highest close since July 2015.

Oil has been trending higher since Sept.28, when OPEC announced it had agreed to a loose framework for a production cut.  The cartel’s members agreed to reduce output by about 700,000 barrels per day to a range between 32.5 million and 33 million barrels daily. OPEC estimates its current output is around 33.24 million barrels each day, and it has not cut its output since 2008.

On Monday, Russian President Vladimir Putin said his country was “ready to join joint measures on reducing the production of oil” and he invited other oil exports to do the same.

However, Sechin told reporters on Tuesday that Rosneft is aiming to raise its oil production this year above the 4.1 million barrels per day it produced in 2015.

Sechin also cast doubt on whether other oil exporting countries will cut their output.

“Try to answer this question yourself: would Iran, Saudi Arabia or Venezuela cut their production?” he said.

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