A meeting of ministers from the Organization of the Petroleum Exporting Countries and their partners in the OPEC+ bloc began on Sunday to try to find a solution to falling oil prices, including the possibility of production cuts, amid tensions with Moscow. Riyadh
Ministers from the 13 member countries of the Organization of the Petroleum Exporting Countries (OPEC), together with their ten partners led by Russia, met on Saturday at the organization’s headquarters in Vienna under the auspices of Saudi Arabia.
The meeting, the second in the Austrian capital since March 2020, began on Sunday afternoon, three hours behind the previously scheduled date.
A source familiar with the discussions said a cut of 1 million bpd has been proposed, but the outcome of the meeting remains uncertain.
Representatives from OPEC countries were tight-lipped about their intentions, and when the representatives arrived at cartel headquarters, a throng of journalists awaited them.
“There is no discussion about production levels,” Iranian Deputy Oil Minister Amir Hossein Zamannia told AFP after an introductory meeting, noting that “everything is on the table” on Sunday.
Saudi Arabia’s oil minister, Prince Abdulaziz bin Salman, was content to comment on the weather, not answering reporters’ questions.
As for his Emirati counterpart, Suhail bin Mohammed Al Mazrouei, he said, without elaborating, “I look forward to a decision to balance the market.”
Oil prices have improved over the past two sessions, but are down about 10 percent after a surprise announcement in early April of a significant cut in production quotas by OPEC Plus members.
The move has not really lifted prices in a market depressed by the global slowdown, interest rate hikes by key central banks and a slow recovery in demand in China as anti-Covid restrictions expire.
The price of a barrel of Brent oil for the North Sea, the benchmark for crude oil in Europe, reached $76 a barrel, while the price of West Texas Intermediate crude remained at $71, far from the peak recorded in March 2022. Conflict in Ukraine, it was about $140.
UBS Group’s Giovanni Stonovo told AFP that the “chance of a new cut has increased significantly” amid tough economic conditions.
The analyst expects the current position to be maintained, but other analysts such as Youssef Al-Shamari of C-Markets Group have revised their expectations. Al-Shammari said he expected Saudi Arabia to “cut at least half a million barrels a day.”
Whether Riyadh succeeds in placating Russia remains to be seen.
Barbara Lambrecht of the “Commeters Bank” group said that Russian Deputy Prime Minister Alexander Novak “believes that OPEC + does not need to change course”. This is because Moscow does not profit from rising prices.
Due to Western sanctions, Russian oil, whose price exceeds sixty dollars, cannot be supplied. If this price is exceeded, companies are prohibited from providing shipping, insurance and other sea transportation permitting services.
“Saudi Arabia, on the other hand, needs higher prices to balance its budget,” Lambrecht added, adding that the profit margin is about $80 per Riyadh.
Despite these differences, Lambrecht believes, “the two main producers of the cartel will be keen to maintain a united front to maintain their influence.”
In the last major dispute between them in March 2020, Russia refused to cut its production to support significantly lower prices due to the Covid-19 pandemic.
After that, Saudi Arabia flooded the market with oil, leading to a sustained decline in prices.
Youssef Al-Shammari believes, “Saudi Arabia does not want this situation to happen again, and so does Russia.”
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