Russia: US shale decline can’t count as ‘output cut’

Production declines across the US shale patch as companies reduce drilling and spending cannot be viewed as a voluntary US cut aimed at supporting oil prices, Vladimir Putin’s Press Secretary Dmitry Peskov said on Wednesday.

The comments suggest that Russia may insist on a collective cut from the United States when major oil producers sit down to discuss a global production reduction later this week.

“These are totally different types of cuts,” Peskov told reporters in Moscow on Wednesday, as carried by Russian news agency RIA Novosti.  

“You compare total reduction in demand with cuts aimed at stabilizing the global markets. It’s like comparing apples and oranges. There is a difference,” the Kremlin spokesman said. 

Asked whether the natural decline in US oil production can be viewed as the US participating in a deal to stabilize markets and prices, Peskov told reporters to wait for the upcoming talks—“let’s wait until tomorrow and the day after tomorrow,” he said.

OPEC, Russia, and producers outside of the OPEC+ format are poised to discuss the possibility of a massive collective global cut, potentially of 10 million bpd, in a video conference on Thursday.

Earlier this week, US President Donald Trump said that he believes American oil production output cuts would happen automatically thanks to the nature of the free market.

OPEC hasn’t asked President Trump to find a way to ask US oil companies to collectively cut production, the President said on Monday.  

“I think it’s happening automatically, but nobody’s asked me that question yet, so we’ll see what happens,” President Trump said at a press briefing, referring to US oil production. 

Russia, as well as OPEC’s leader Saudi Arabia, are signaling that they are ready to talk but are pointing out that any massive cut, 10 million bpd-15 million bpd, as touted by President Trump, should involve the United States, too.  

This article was originally published on Oilprice.com