MOSCOW: Saudi Arabia and Russia, the world’s two biggest oil exporters, on Thursday called for all Opec+ members to join an agreement on output cuts for the good of the global economy only days after a fractious meeting of the producers’ club.
Hours after Russian President Vladimir Putin went to Riyadh in a hastily arranged visit to meet Saudi Crown Prince Mohammed bin Salman, the Kremlin released a joint Russian-Saudi statement about the conclusion of their discussions.
The Organisation of the Petroleum Exporting Countries (Opec), Russia and other allies agreed last week to new voluntary cuts of about 2.2 million barrels per day (bpd), led by Saudi Arabia and Russia rolling over their voluntary cuts of 1.3 million bpd.
“In the field of energy, the two sides commended the close cooperation between them and the successful efforts of the Opec+ countries in enhancing the stability of global oil markets,” said the statement released by the Kremlin.
“They stressed the importance of continuing this cooperation, and the need for all participating countries to join to the Opec+ agreement, in a way that serves the interests of producers and consumers and supports the growth of the global economy,” the statement, which was in Russian, added.
The Russian version used the word “join” while an English translation of the statement, also released by the Kremlin, used the word “adhere” to the Opec+ agreement.
Oil market sources said that such an explicit public remark from the Kremlin and the kingdom about “joining” cuts appeared to be an attempt to send a message to members of the Opec+ club who had not cut or not cut enough.
The biggest member of Opec excluded from the cuts is Iran, the economy of which has been under various US sanctions since 1979 after the seizure of the US embassy in Tehran.
Iran is boosting production and hopes to reach output of 3.6 million bpd by March 20 next year.
After his return to Moscow from Saudi Arabia, Putin on Thursday held talks with Iranian President Ebrahim Raisi in the Kremlin, along with Russia’s Deputy Prime Minister Alexander Novak and Defence Minister Sergei Shoigu.
Mystery still surrounds Putin’s trip to Riyadh and Abu Dhabi, on which he was escorted by four Russian fighter jets, and it was not immediately clear what particular issue was so important for Putin to make a rare overseas trip.
Opec+ discard?
Producer group Opec+, the members of which pump more than 40 per cent of the world’s oil, had to delay its meeting over disagreements with African producers about output, though some traders said they suspected a deeper schism inside the group.
After the producers decided to cut supply, oil prices fell to a five-month low — a clear sign that the market had expected more forthright action from Opec+.
Putin and MbS, who together control a fifth of the oil pumped each day, were shown smiling and engaging in an effusive handshake as Putin emerged from his car in the Saudi capital.
Published in Dawn, December 8th, 2023
