MOSCOW (Reuters) - Venezuela’s President Nicolas Maduro will meet Russian leader Vladimir Putin on Thursday as he ends his tour aimed at trying to persuade big oil producers to cut output to stop the price rout.
Prices of oil, cornerstone of both the Russian and Venezuelan economies, have touched their lowest in almost six years and Maduro traveled this week to Iran, Saudi Arabia, Qatar and Algeria to gather support for his diplomatic push.
“The situation on the global oil markets along with some other issues will be among the topics to be discussed,” Putin’s spokesman Dmitry Peskov told Itar Tass news agency.
Venezuelan and Algerian officials have this year initiated talks over production levels between Russia and producers group OPEC, but officials in Moscow have said the country, in which around 40 percent of output is in private hands, would find it technically tough to cut.
Russian energy minister Alexander Novak took a similar line on Wednesday, saying volatile prices were part of market patterns. “Many countries agree that any artificial action to change the situation on the market is impossible,” he said.
Yet Maduro’s move is supported by some in OPEC such as Iran and Venezuela, who want output cuts from the organization but can contribute little themselves. However it has met a cool response from core Gulf OPEC producers.
Saudi Arabia rejected output cuts at the last OPEC meeting in November, saying it would only lead to a loss of market share. Gulf OPEC sources have said Saudi might consider cutting production if non-OPEC members, such as Russia, joined in.
Russia agreed to symbolic output cuts in tandem with OPEC during the 2001 price collapse, but never followed through on its pledge, causing anger among OPEC members.
Since then Moscow has continued to push crude output to new records, eventually overtaking Saudi Arabia as the top global producer in the last decade.
But the slump in oil prices combined with Western sanctions on Moscow over Ukraine have led to currency and budget crises much worse than in any year of Putin’s 15-year rule and made Russia think hard about its choices.
Russia’s finance minister called on Wednesday for a cut in planned spending and its economy minister said there was a high chance Russia’s credit rating would be downgraded to “junk” status.
“The state cannot have the kind of spending it used to have with economic growth ... (and) with the oil price at $100 per barrel,” Finance Minister Anton Siluanov said.
Moody’s Investors Service said on Tuesday there was a high risk Venezuela would default on its debt.
Russia depends for half its budget revenue on energy, while Venezuela depends on oil for 96 percent of its hard currency revenue, leaving its economy at the mercy of a market that has seen prices drop 60 percent since June to under $46 a barrel.
Writing by Dmitry Zhdannikov; Editing by Louise Heavens and David Holmes