Russia and Saudi Arabia’s cooperation is set to continue, Ibrahim al-Muhanna, Saudi energy advisor, said on Friday, in hopes of allaying the lingering fears that Russia is itching to get out from under the deal that has restricted its crude oil production.
Russia’s finance minister last weekend hinted that Russia may fight America for its share of the oil market by bailing on the OPEC deal—even doing so lowers the price of oil. The statement sparked fear in the oil market that the agreement forged with OPEC was drawing to a premature close.
Russia has yet to decrease production to the level that it agreed to for its deal with OPEC and other nonOPEC signatories to the deal. While Russia was upfront about its inability to instantly reduce production to its quota under the deal, it said it would reach those levels by end of March or early April.
Russia’s crude oil production in April stood at 11.24 million barrels per day, still slightly off its promised level of 11.191 million bpd.
Today’s words may give the market more confidence in the cartel and company’s stick-to-itiveness to do whatever it takes to balance the oil market.
“Cooperation will continue between Russia and Saudi Arabia. It is the core of OPEC+ cooperation,” al-Muhanna said today at the International Oil Summit in Paris.
While this cooperation continues, Russia and Saudi Arabia are often at odds over publicly spoken words regarding the balance in the oil market and when the deal will again be reviewed. The current production cut deal is for now scheduled to end in June, with the two finding themselves once again with differing opinions on whether the deal should go beyond June, and if so, for how long and at what volume.
The signatories to the deal are for now taking a wait and see approach, with many geopolitical variables that need to be considered, mostly notably possible supply disruptions in Libya, Iran, and Venezuela.
Al-Muhanna said on Friday that he expected the oil market to be “well balanced”.