Russia, Saudi Arabia Reach Agreement on a Possible Oil Output Check in Future

BENGALURU: Amid a global glut of crude oil taking its toll on producer nations, a joint statement from two of the world’s largest producers has surfaced on the sidelines of a Group 20 Summit in China. The statement, signed by respective energy ministers of Russia and Saudi Arabia, seeks a global level cooperation to drive price per barrel higher. "Freezing production is one of the preferred possibilities, but it does not have to happen specifically today," Khalid al-Falih, Saudi Energy Minister said.

The joint statement emerges as the first in 15 years since Russia consented on limiting output in tandem with OPEC, which Russia never went ahead with. Russian Energy Minister Alexander Novak commented that he was open to ideas on what cut-off period to use if producer countries decided to freeze output. Novak also revealed hints of possible outright oil production cuts. "We are ready, if there is such a decision, to join" an oil output freeze, TASS news agency cited Novak as saying.

Earlier in April this year, Russia decided to collaborate with the Organization of Petroleum Exporting Countries (OPEC), but later pulled back due to non-agreement with Riyadh over participation of Iran—OPEC's third-largest producer. However, on this recent development, Russian President Putin went ahead and commented that a new deal on oil output could involve some compromise on Iranian output.

This move by the largest OPEC and one of the largest non-OPEC has received applauses from smaller producers such as Venezuela, which is one of the worst hit victims of global oil price plummet. "We believe that the oil market rebalancing has been rather delayed. And certainly joint actions which were considered at the beginning of the year, including a freeze, could have drawn much nearer the date of rebalancing of the respective markets," Novak said.

"The market is getting better and we noticed that the prices reflect this. A coordinated and appropriate, collective decision on production will help bring balance and reduce inventories in a more timely manner," expressed Khalid.

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