Russia and Opec in new oil-price battle

Another fierce showdown between Russia and Opec is expected in the week between Christmas and New Year. Though the oil-price war being waged between Opec and non-Opec countries has calmed slightly recently, industry experts believe hostilities are about to resume.

Opec is understood to have set a deadline of 27 December for Russia and others to agree a production cut of 500,000 barrels a day. The Saudi-led cartel plans an emergency meeting on 28 December if its demands are not met.

The battle, over the need for sweeping production cuts, has caused crude prices to tumble more than 25 per cent in two months. Russia, the world's largest non-Opec producer, has said it will make the cuts, but insiders said individual Russian oil companies will not comply by the given date, which will inflame Opec.

One Moscow-based oil trader said: "Lukoil, Yukos and the others will outwardly support the cuts, but in reality they will never make them. It's all money to them, regardless of crude prices. Every barrel that can be sold will be."

Jay Bhutani, an oil industry analyst at Lehman Brothers, believes the present crisis is not a passing phenomenon. The output battles "will be repeated many times over the coming years", he predicted.