Moscow: Russia’s finance minister is counting himself among the sceptics of OPEC’s agreement to cut production, if only to beat back efforts to raid a windfall as oil rallies.

“Improvements in oil prices, in our view, aren’t structural in character,” Anton Siluanov told reporters in Moscow on Wednesday. “Rather, it’s a reaction to the limits on oil output adopted by Opec countries for half a year.”

Already facing down calls to “divide up the additional resources,” Siluanov said his ministry is urging authorities to use the extra money to decrease spending from the government’s wealth funds, one of which the Finance Ministry expects to be depleted next year. Russia stands to earn about 1 trillion roubles (Dh59 billion, $16.1 billion) more than planned next year if crude averages $10 higher than the $40 oil price used to calculate the budget for the next three years, according to Siluanov.

Oil prices have climbed about 15 per cent since the Organisation of Petroleum Exporting Countries announced its first production cuts in eight years on November 30 as it seeks to end a three-year glut that the group admits lasted longer than it expected. The accord was widened on Dec. 10 when 11 non-members, including Russia, signed up as well.

Russia’s Urals export blend usually trades at a discount to Brent, which was near $54 in London on Wednesday.

Financial strains

Already running the widest budget deficit in half a decade, the Finance Ministry is trying to enforce fiscal disciple as financial strains ease. It has previously proposed reducing the shortfall by one percentage point each year to balance the books by 2020.

The 2017-2019 draft budget won approval from lawmakers and now awaits President Vladimir Putin’s signature. Under its terms, the government will cap nominal spending near this year’s level and plans no major stimulus to support domestic demand even as the economy suffers through its second year of recession.

Siluanov says the outlook for oil remains in question because a number of issues are unresolved. These include shale output, compliance by crude producers with the Opec agreement and the development of the global economy, which will drive demand for energy, according to the finance minister.

By taking advantage of the extra revenue to spend less from the wealth funds, Russia will safeguard buffers that “will allow us to ensure the budget’s stability and reliability not only in 2017, but also in 2018 and 2019,” Siluanov said.