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Saudi Arabia and Russia would like to continue their coordination to support oil market stability, the leaders of the two most influential members of the OPEC+ production pact said during a telephone conversation this week.
Russia’s President Vladimir Putin and Saudi Arabia’s Crown Prince Mohammed bin Salman exchanged views on the ongoing OPEC+ agreement and “underscored their willingness to continue close coordination between Russia and Saudi Arabia in the interests of maintaining stability in the global energy market,” the Kremlin said, noting it was the crown prince who called Putin.
“They also emphasized continuation of the two sides to coordinate, in a way that would back up the stability of oil market and the growth of the world economy,” the Saudi Press Agency reported on the call.
Analysts say that the oil production curbs by OPEC+ are set to tighten the market in the first quarter, also thanks to Saudi Arabia’s additional 1 million barrels per day (bpd) production cut beyond its quota in the OPEC+ pact this month and next.
While the Saudis are cutting extra barrels to support the market and prices in February and March, Russia, the leader of the non-OPEC group in the OPEC+ pact, was allowed to boost production by 65,000 bpd in each of those two months.
As the next monthly Joint Ministerial Monitoring Committee (JMMC)—scheduled for March 3 to decide production levels from April onwards—is fast approaching, speculation is set to increase about the Saudi and Russian views about a further easing of the OPEC+ cuts.
Neither the market nor the two countries have forgotten last March’s debacle when Russia and Saudi Arabia disagreed on how to tackle the crashing demand at the start of the pandemic and broke up the OPEC+ pact for a month.
“At current price levels, one would expect that a number of producers would push for a further easing, and this is the stance we would expect to see taken from Russia,” ING strategists Warren Patterson and Wenyu Yao said on Monday. “However, OPEC+ will be keen to avoid a repeat of the meeting in March last year, when the previous deal fell apart.”
After the Texas freeze, the oil market will now increasingly turn its focus to the March OPEC+ meeting “as the call for more crude oil is rising,” Saxo Bank said on Tuesday.
