For its part, Russia would naturally prefer better conditions for itself. Russian oil companies, in particular, are not fans of the cuts. Last year, Igor Sechin, CEO of Russia’s Rosneft oil conglomerate, even urged the Russian government not to agree to the pact.
He had reason to be concerned. The problem with production cuts is that they create market expectations that they will be extended. Failing to renew them can lead to a plunge in prices, Kaznacheev told The Moscow Times in an email. But Russia is unlikely to achieve better conditions for itself — except, perhaps, a shorter extension.
The reason is that any attempt to get special treatment would likely derail the negotiations, says Andrei Polishchuk, an oil and gas analyst with Raiffeisenbank.
“The major actors [in the pact] are Saudi Arabia and Russia,” he says. “In order to convince the other countries to stay on, they can’t reevaluate the current conditions for Russia.” And Russia is unlikely to risk undermining the extension. Without the pact, oil prices could fall below $40 per barrel.
The last time that happened, in early 2016, it dragged the ruble’s value to its lowest point since the 1998 financial crisis. At the time, Finance Minister Anton Siluanov stressed the risk that the 1998 crisis could repeat itself if the government failed to make necessary budget adjustments.
For Moscow, that would be a much worse outcome than the OPEC+ status quo.
