OPEC Unlikely to Cut Production to 'Inflate Prices Beyond $55 per Barrel'

OPEC countries proposed to freeze oil production in order to reverse the drop in global prices, an issue that is expected to be debated during November's meeting in Vienna. Radio Sputnik discussed the topic with Business New Europe editor-in-chief, Ben Aris.

Replying to the question of how likely is a deal to be reached at the OPEC summit in November, Aris said that OPEC countries won't "radically cut production in order to inflate prices beyond $50-55 a barrel."

At the same time, if prices creep up, everybody would keep their production up high which would again put "a natural cap on the price gains," Aris stated.

Thus, according to the expert, "nothing practical will happen" during the summit except for "flag waving" which will keep the prices around the 50-dollar mark.

The expert argued that the main thing during the meeting would be "talking the price up."

"If you look at the production levels at the moment, Russia is now producing 11 billion barrels a day, it's like a post-Soviet record. And there is no intention at the moment to drop those production levels," Aris said.

"And on the Saudi side, they have the same problem: they are running 80-90% of the budget's revenues that is earned from oil. They need the prices to go higher but at the same time they need the cash. And while the markets have pushed the prices lower, they can't do anything, but to pump as much oil as they possibly can to make up in volume for what they've lost in the price," the expert added.

Earlier, Russian President Vladimir Putin's said that Russia will take part in an oil supply cap deal with OPEC. Russian Energy Minister Alexander Novak will meet with the representatives of Saudi Arabia on Tuesday on the sidelines of the World Energy Congress in Istanbul.

OPEC production is expected to remain at all-time highs until November's meeting in Vienna, when the cartel is expected to set a date for its output freeze.