Saudi Arabia, Russia in discussion on scaling back oil supply caps
ST PETERSBURG: Saudi Arabia and Russia, the oil producers who led the effort to shrink a global glut, said they are discussing easing output curbs for the first time.
While scaling back the supply caps was “on the table”, no decision had been made, said Saudi Arabian Energy Minister Khalid Al-Falih, here, yesterday .
The Organisation of the Petroleum Exporting Countries (Opec) and its partners would discuss loosening the curbs next month, said his Russian counterpart Alexander Novak after a meeting between the two officials.
Speculation is swirling over when and by how much the producers will scale back cuts after they eliminated an inventory surplus that had sparked a price crash about four years ago.
Market uncertainty has risen following renewed United States sanctions on Iran that may curb the Islamic Republic’s exports, and as economic turmoil in Venezuela drives a collapse of the Opec member’s oil industry. Crude’s rebound is also spurring concern that demand may falter.
Russia and Saudi Arabia share a common view on “consuming countries’ anxiety and concerns over potential supply shortages”.
“We will ensure that the market remains in its trajectory towards rebalancing, but at the same time we will not overcorrect.”
The two nations would meet at least two more times before Opec and its partners gathered in Vienna next month, said Al-Falih.
While Saudi Arabia has shown a desire for higher prices to bankroll domestic economic reforms and underpin the valuation of its state oil company in a planned initial public offering, the top Opec member and its allies are facing pressure from consuming nations as well as crude producing companies.
“Earlier we said we will monitor the market situation, now we can say that we are looking into the issue” of a smooth recovery in output to meet growing demand, said Novak.