Saudi rebukes Russia over oil collapse
Saudi Arabia calls for urgent OPEC+ meeting
DUBAI, April 4, (Agencies): Saudi Arabia sharply criticized Russia on Saturday over what it described as Moscow blaming the kingdom for the collapse in global energy prices, showing the tensions ahead of an emergency meeting of OPEC and other oil producers.
Oil prices sharply fell after the socalled OPEC+ group of countries including Russia failed to agree to production cuts in early March. A price war began soon after, with Saudi Arabia threatening to pump at a recordbreaking pace to seize back market share even as the coronavirus pandemic saw demand sharply drop as airlines worldwide halted flights.
International benchmark Brent crude fell to around $24 a barrel, compared to prices of over $70 a year ago. Prices slightly have rebounded with President Donald Trump tweeting and talking about the need for a production cut, but rancor between Saudi Arabia and Russia could imperil a deal emerging from a planned teleconference Monday.
That anger could be seen early Saturday in two critical statements released by the kingdom’s state-run Saudi Press Agency. The first came from Saudi Foreign Minister Prince Faisal bin Farhan under the headline: “Statements Attributed to One of Russian
President’s Media Are Completely Devoid of Truth.”
Prince Faisal did not identify the story, nor the outlet he was critiquing.
A second statement came from Saudi Energy Minister Prince Abdulaziz bin Salman, one of King Salman’s sons. The prince criticized Russian Energy Minister Alexander Novak by name for suggesting Saudi Arabia wanted to cut out shale producers.
The prince “expressed his surprise at the attempts to bring Saudi Arabia into hostilities against the shale oil industry, which is completely false as our Russian friends recognize well,” the statement said.
Saudi Arabia’s statements likely seek to defuse any possible confrontation between the kingdom and Trump, who tweeted Thursday that Moscow and Riyadh “will be cutting back approximately 10 Million Barrels” without elaborating. Trump’s tweets and public comments have affected oil prices in the past.
Saudi Arabia called for an urgent meeting of the OPEC+ countries in a drive to reach a “a fair” agreement that would restore balance to the oil markets, following US President Donald Trump’s call with Crown Prince Mohammad bin Salman.
Saudi Arabia said it tried to reach an agreement within OPEC+ format to restore balance in oil markets, and had support of 22 countries of OPEC+, Saudi Press Agency reported, but “an agreement did not happen for failure to reach a consensus.”
The call is part of Saudi Arabia’s quest to support global economy “in this extraordinary circumstance and in appreciation to the request of President Trump and the friends in the US,” it said.
OPEC+ is a group of 24 oil-producing nations, made up of the 14 members of the Organization of Petroleum Exporting Countries (OPEC), and 10 other non-OPEC members, including Russia. OPEC+ agreement to cut production by 1.7 million bpd expired last Tuesday without any signs of plans to renew the agreement.
The Saudi call came shortly after Trump and Crown Prince Mohammad bin Salman discussed conditions of international oil markets amidst a sharp drop in oil prices.
Trump also spoke with Russian President Vladimir Putin on Monday and discussed oil markets. The Kremlin said the two leaders exchanged views on the current state of the global oil market and agreed that Russian and American energy ministers should hold consultations on this topic.
Lowest
“Looking forward, while the lowest point is behind us, it’s not the time to celebrate,” said Larry Hu of Macquarie Capital.
Hu said the economy faces potential headwinds including a second wave of coronavirus outbreak, a possible global recession and a financial shock due to plunging oil prices. The shutdown of China’s economy sent out global shockwaves, battering Asian countries that supply its factories with components and raw materials and disrupting shipping, airlines and other industries.
Authorities say state-dominated industries such as steel are close to normal production but automakers and other private sector manufacturers say they are operating below normal levels. They say the pace of their recovery depends on how quickly their supply chains can be restored.
The latest data “do not indicate that economic activity has fully recovered,” the China Federation of Logistics & Purchasing said in a statement.
The country needs to “understand the unprecedented severity and complexity of the current domestic and international economic situation” and “return to work and production and expand domestic demand,” the group said.