Putin says Russia will freeze or cut oil output as Venezuela calls for ‘new mechanism’ on prices

President agrees to join measures to limit output and warns if low prices continue it could lead to 'chronic' lack of investment in the sector, spurring further volatility.

One of Yuganskneftegaz derricks in Priobskoe oilfield some 200km from Nefteyugansk, Russia. Mr Putin says Russia will freeze or cut output. Yuri Kochetkov / EPA

The Russia president Vladimir Putin on Monday said that non-Opec member Russia was ready to join measures to limit oil production, saying that this was the only way to balance the market after a prolonged period of low prices.

“In the current situation, we believe a freeze or a cutting of the production of oil is the only way preserve the stability of the energy sector and accelerate a rebalancing of the market,” he said at the World Energy Congress in Istanbul.

“Russia is prepared to join joint measures limiting production and calls on other exporting countries to do the same,” he added.

He expressed hope this would lead to a concrete agreement at a November Opec meeting and that this idea would be a “positive signal to the market and investors”.

The period of low oil prices has been hugely damaging to economies lsuch as Russia, which has failed over the past years to reduce its dependence on hydrocarbon exports for revenues.

The Russian energy minister Alexander Novak is expected to attend an informal meeting of Opec energy ministers in Istanbul on Wednesday.

Mr Putin raised alarm that if the current trend of low prices continued, it could lead to a “chronic” lack of financing in the sector which could in turn lead to unpredictable flare-ups in prices.

“Russia as prominent energy power will always make its contribution to stable development,” he said, insisting that even in the current difficult times Russia was still investing in oil extraction.

Mr Putin is making his first trip to Turkey following a crisis sparked by the shooting down of a Russian war plane over the Syrian border last November. He will later hold talks with the president Recep Tayyip Erdogan.

Mr Putin’s comments came as Venezuelan president Nicolas Maduro called for fairer oil prices to help producers, saying Opec and non-member states needed to create a “new mechanism” to ensure the price of oil was propped up.

Also speaking at the World Energy Congress, Mr Maduro said the meeting on Wednesday could be a first step towards creating a new alliance.

“Prices are not sustainable anymore and have fallen to their lowest levels for the last 40 years,” Mr Maduro said. “We see they are even below production costs.”

“Prices must be fairer and more realistic … for investment we need fair prices.”

Referring to the upcoming Opec talks on Wednesday he expressed hope that “the energy ministers can reach an agreement and through this agreement we hope there can be an alliance among producers”.

“If there can be let it be formed. For the market to have stability we are ready to do everything, hopefully in the next six months we will come up with a new mechanism.

“We need a new mechanism. The oil world needs realistic and fair prices.”

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