Saudi Arabia and Russia stalled Monday over whether their producers’ alliance should boost crude oil production amid a resurgent pandemic, delegates said after a day of talks that ended without a deal.
The 13-member Saudi-led Organization of the Petroleum Exporting Countries met 10 Russian-led producers, a group collectively dubbed the OPEC-plus, almost Monday in the first of their monthly meetings to evaluate global oil demand . Last month, they agreed to increase production by 500,000 barrels per day, bringing their net cuts to about 7.2 million barrels per day since the start of the pandemic.
On Monday they had to decide whether to continue to increase production or whether to wait.
Saudi Arabia and most of the wider alliance held out for at least another month, delegates said. These countries are concerned that a new variant of the Covid-19 virus threatens a resurgence of the pandemic, while vaccination programs are not progressing as quickly as expected.
“Even in this generally optimistic environment, I would urge caution,” Saudi Energy Minister Abdulaziz bin Salman said during the opening speech ahead of the online meetings. “Don’t jeopardize what we have achieved for an immediate illusionary benefit.”
However, Moscow pushed for an increase in production by an additional 500,000 barrels per day, the delegates said. Russia is seeing oil consumption returning and is concerned about losing market share to US producers, who are not subject to restrictions, these people said.
“We hope that in 2021 we will be able to see the recovery in demand, also as a result of the vaccination already underway in many countries,” Russian Deputy Prime Minister Alexander Novak said ahead of the meeting.
The group will meet again on Tuesday, hoping to smooth out the differences. News of the disagreement pushed oil prices down. During late trading in London, Brent, the international benchmark, fell 0.7% to $ 51.40 a barrel, while West Texas Intermediary was down 1.1% to $ 47.90 a barrel.
Saudi Arabia and Russia clashed over oil policy last year, basically sparking a global price war as they each opened their taps and flooded the market. That just unfolded as the coronavirus quickly spread from China to the rest of the world. Governments around the world began to lock up their economies and the demand for oil plummeted.
Amid a sharp price drop, Saudi Arabia and Russia dropped their rivalry, and OPEC-plus agreed to deliver a record-breaking 9.7 million barrels per day. Part of the deal called for the eventual recovery of production in 2 million barrels per day increments. The first of that additional production came online over the summer, while members agreed last month to bring in an additional 500,000 barrels per day by January.
Write to Benoit Faucon at [email protected] and Summer Said at [email protected]
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Appeared in the January 5, 2021 print edition as ‘Saudis, Russia Split on Oil Output’.