Russia and Saudi Arabia invite OPEC+ to join the oil cuts

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Inspenet, December 11, 2023.

Saudi Arabia and Russia, the two main oil exporters in the world, called last Thursday to all members of the OPEC+ to join an agreement based on oil cuts and the reduction of production for the sake of the global economy.

This controversial call comes shortly after a contentious meeting of the producers’ group. After Russian President Vladimir Putin paid a visit to Riyadh to meet Saudi Crown Prince Mohammed bin Salman, both nations issued a joint statement regarding the outcome of their talks.

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The call is to join the oil cuts

The Organization of the Petroleum Exporting Countries (OPEC), Russia and other allies are known to have agreed last week to implement new voluntary cuts of approximately 2.2 million barrels per day (bpd). Saudi Arabia and Russia led these cuts, renewing their commitment to voluntarily reduce production by 1.3 million barrels per day .

In the field of energy, the two sides praised the close cooperation between them and the successful efforts of OPEC+ countries to improve the stability of global oil markets ,” says the statement issued by the Kremlin.

They highlighted the importance of continuing this cooperation and the need for all participating countries to join the OPEC+ agreement, in a way that serves the interests of producers and consumers and supports the growth of the global economy ,” reads the release.

The Russian version used the word “join,” while the English translation of the statement, also released by the Kremlin, used the word “join” the OPEC+ agreement. According to the Saudi state news agency SPA, the meeting between the crown prince, known as MbS, and Putin emphasized the need for OPEC+ members to commit to the group’s agreement.

Likewise, sources in the oil market indicated that the explicit formulation by the Kremlin and the kingdom about “joining” the cuts appears to be an attempt to send a message to OPEC+ members who have not implemented cuts or have not reduced enough.

Iran, the largest OPEC member exempt from cuts, has been subject to several US economic sanctions since 1979, following the seizure of the US embassy in Tehran. Despite this, Iran is increasing its production and aims to reach production of 3.6 million barrels per day (bpd) by March 20 next year.

Following his return to Moscow from Saudi Arabia, Putin held talks with Iranian President Ebrahim Raisi in the Kremlin on Thursday. These negotiations also included the participation of Russian Deputy Prime Minister Alexander Novak and Defense Minister Sergei Shoigu.

It is important to mention that the group of OPEC+ producers, made up of countries that represent more than 40% of global oil extraction, had to postpone their meeting due to disagreements with African producers regarding production levels.

Although some operators expressed suspicions about the possibility of a deeper conflict within the group. Following the decision to reduce supply, oil prices fell to their lowest point in five months, clearly indicating that the market expected more forceful intervention from OPEC+.

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Source: reuters.com

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