An Iraqi oil worker works at Al-Doura oil refinery. (Photo: Getty Images-Oleg Nikishin)
Russia and Saudi Arabia made a joint statement on September 5 at the G20 summit in China calling for cooperation to support the oil markets. According to the statement, Moscow and Riyadh had agreed to create a task force to contribute for oil market stability, including a production freeze.
Crude prices jumped, following the report. Futures for Brent crude have grown by almost five percent to over $49 per barrel in early trading today.
According to Deputy Crown Prince Mohammed bin Salman, oil market stability is impossible without the cooperation between Russia and Saudi Arabia. The Saudi representative said this after the meeting with Russian President Vladimir Putin in Hangzhou, China on September 4.
“Our countries are the two biggest oil producers, that’s why there can’t be a stable oil policy without the participation of Russia and Saudi Arabia,” the Prince said.
Reports say Russia would likely participate in OPEC’s November meeting in Vienna to discuss the possibility of an oil output freeze by major producers. Informal talks in Algeria on the same issue is expected later this month.
I dont trust KSA.
In the past, the KSA was the most reliable member of OPEC. The KSA is bleeding. Their genocidal war in Yemen is costing them at least $7B a year which is equivalent to about $19 bbl of oil. Now they do have cash reserves to cover this but they are bleeding.
Good info. But I rather mean they have always used oil prices as a political tool, and now there taking themselves down with it. Bisides that, they have the same ideology as ISIS.
The war in Yemen is one thing, however budget deficits are significant at these lower prices. They burned 250 billion through their reserves due to their budget requirements, because oil is the primary money making commodity they have to offer. On the other hand, the Russian reserves have remained steady and are inching upwards of 400 billion. Russian economy is more diversified and lower oil prices are not so detrimental as is the case with the Saudis. The Saudi riyal is pegged to the dollar, however, the rubble is free floating, giving the Russians the flexibility to balance their budgets in rubbles, without incurring much debt. It was the foolish Saudis that agreed with the US to flood the market with oil, hoping to hurt Russia’s revenues as they did with the Soviet Union, only to end up on the loosing side. Russia can do ok at these prices, Saudis cannot, they will burn their reserves in a few years and go into oblivion if they do not change budget priorities.