Russia has opposed deeper supply cuts - and oil prices are tumbling

Courtney Goldsmith
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Oil Prices Hit Historic High On Weak Dollar
Russia has opposed any further supply cuts (Source: Getty)

Russia has spoken out against deepening the production cuts led by the Organisation of the Petroleum Exporting Countries (Opec) despite plunging oil prices.

After a bullish week, oil prices are now diving on the back of rising exports from Opec nations and a stronger dollar.

The price of global benchmark Brent crude was 2.58 per cent lower at $48.33 per barrel in mid-afternoon in London, while West Texas Intermediate (WTI), the US benchmark, was 3.14 per cent lower at $45.59 a barrel.

Russian government officials said the country aims to continue with Opec's current deal, but imposing further cuts would send the market the wrong message, Bloomberg reported.

Investors are losing confidence Opec's current deal will successfully curb the supply glut in the market. In May, Opec and non-Opec nations agreed to extend a deal to cut output by 1.8m barrels per day (bpd) until March 2018.

However, Opec exports climbed for the second month in a row in June, according to Thomson Reuters Oil Research data. Opec exported 25.92m bpd in June, up 450,000 bpd from May and 1.9m bpd more than a year earlier.

"While compliance [with Opec's cuts] has been high, the impact has so far been limited, with producers not slashing exports by the same quantity as they cut output," said Ole Hansen, head of commodity strategy at Saxo Bank.

Lukman Otunuga, research analyst at FXTM, said: "With the increasing output from Nigeria and Libya threatening to obstruct the efforts made by the rest of the group to rebalance the markets, oil could be in store for further pain moving forward."

Read more: Output among Opec members actually increased last month

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