Saudi Arabia says no talks on new oil deal, Moscow suggests larger OPEC+
29 March, 2020, 6:31 am
MOSCOW/DUBAI/LONDON (Reuters) – Saudi Arabia said on Friday it was not in talks with Russia to balance oil markets despite rising pressure from Washington to stop a price rout amid the coronavirus pandemic and an attempt by Moscow to fix a rift with the de facto OPEC leader.
A three-year supply pact between the Organization of the Petroleum Exporting Countries (OPEC) and other producers, including Russia, fell apart this month after Moscow refused to support Riyadh’s plan for deeper production cuts, prompting Saudi Arabia to pledge to raise output to a record high.
The resulting supply boost has coincided with plummeting demand as governments around the world implement national lockdowns to slow the spread of the coronavirus. The twin-pronged assault on prices has sent Brent crude LCOc1 to a 17-year low below $25 a barrel and hammered the income of oil producers.
“There have been no contacts between Saudi Arabia and Russia energy ministers over any increase in the number of OPEC+ countries, nor any discussion of a joint agreement to balance oil markets,” an official from Saudi Arabia’s energy ministry said, referring to the wider grouping of oil producers.
The comment came after a senior Russian official said on Friday that a larger number of oil producers could cooperate with OPEC and Russia, in an indirect reference to the United States, the world’s biggest producer which has never cut production.
“Joint actions by countries are needed to restore the (global) economy … They (joint actions) are also possible in the OPEC+ deal’s framework,” said Kirill Dmitriev, the head of Russia’s sovereign wealth fund.
Dmitriev and Energy Minister Alexander Novak were Russia’s top negotiators for the previous OPEC pact, which officially expires on March 31. Dmitriev declined to say which nations could be included in a new deal.
The deal between OPEC and Russia broke down after Moscow declined to support bigger output curbs, arguing that it was too early to estimate the pandemic’s impact.
Officials and oil executives in Russia have been split on the need for cuts with Dmitriev and Novak supporting cooperation while the head of Kremlin oil major Rosneft, Igor Sechin, has criticised the cuts as providing a lifeline to the less competitive U.S. shale industry. President Vladimir Putin has said little since the OPEC+ deal collapsed.