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Wednesday, May 29, 2024

Norway waits for Putin’s next move

Russian President Vladimir Putin was being widely credited or blamed for the sudden rise in oil prices towards the end of this week. With prices up 25 percent from recent low levels, Norway’s krone strengthened again and stock markets rose.

Russian President Vladimir Putin has been much in the news lately, but took time to congratulate the Kon-Tiki Museum in Oslo on the occasion of what would have been explorer Thor Heyerdahl's 100th birthday on Monday. PHOTO: Presidential Press and Information Office
Russia’s often unpredictable president, Vladimir Putin, was being both credited or blamed for the rapid rise in oil prices late this week. His signals that Russia may limit oil production sent the oil price up, and contributing to strengthening Norway’s krone. PHOTO: Presidential Press and Information Office

Putin was widely viewed as sending out signals on Thursday that it would limit its own oil production, perhaps in line with members of the OPEC cartel. That sent oil prices jumping, from a low of USD 27 for a barrel of North Sea crude last week, to around USD 34 on Thursday.

Torbjørn Kjus, an oil analyst at Norway’s biggest bank DNB, was among those following the developments closely. “All this news is coming out of Russia,” Kjus told Dagens Næringsliv (DN). “But before that, we knew that Saudi Arabia was lobbying Russia before the OPEC meeting in June last year. Russia wasn’t willing to go along with production cuts then, but it looks like oil prices below USD 30 have had an effect.”

Kjus still doesn’t think it will be easy for OPEC and Russia to agree on production cuts to reduce the huge supply of oil on world markets. That’s mostly because Iran, Saudi Arabia’s arch enemy, is gearing up its own daily oil exports now that sanctions have been lifted.

Norway, meanwhile, remains on the fence regarding production cuts. Norway is one of the world’s largest exporters and thus a major player in the international oil market, but has a history of going its own way regarding production.

“Norway has no plans for measures to regulate production,” Ella Ege Bye Mørland, information chief at Norway’s Oil and Energy Ministry, told DN on Thursday. Terje Lien, energy spokesman for the Labour Party, was also non-committal about any production measures. “There’s been speculation about production cuts by OPEC,” Lien said. “I don’t think we should speculate right now. It’s the biggest producers who need to evaluate that.”

As one of the US’ greatest allies, Norway has no tradition for cooperating with either the Arab states or Russia on oil price manipulation. The only time Norwegian officials even thought about it, according to DN, was in 1998, when oil prices fell to around USD 10 a barrel.

Meanwhile, Norway’s currency, the krone, has been strengthening steadily for the past few days. After reaching a new low earlier this month, when it cost nearly NOK 9 to buy one US dollar, the krone was trading down around NOK 8.61 to the dollar on Thursday night. The Oslo Stock Exchange was also up nearly 1 percent at the end of the trading day. Berglund



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