Russian and Saudi energy ministers discuss extending OPEC oil production cuts

Russian and Saudi energy ministers discuss extending OPEC oil production cuts

Russian Energy Minister Alexander Novak will host his Saudi Arabian counterpart, Khalid al-Falih, in Moscow today. Both countries—the world’s top

917356 162585863

Photo: Reuters

Russian Energy Minister Alexander Novak will host his Saudi Arabian counterpart, Khalid al-Falih, in Moscow today.

Both countries—the world’s top crude oil exporters—are at odds as to how to respond to plummeting oil prices. Moscow wants to increase production to further decrease oil prices to a preferred price of $60-$65 per barrel, while Riyadh wants to maintain the $1.2 million daily barrel limit agreed to with Russia in December 2018, which led to price increases earlier this year. Saudi Arabia needs $85 per barrel to balance its budget.

Russia fears that further production curbs would expose gaps in the market that could be filled by American oil producers—especially in Europe, where Russian oil exports are under huge pressure from rival American companies. Indeed, over the past year, US President Trump has lobbied OPEC to increase production to keep prices low, but this has been to no avail.

The ministers are not expected to agree to an extension of cuts today, but Mr Falih is confident Russia will eventually okay an extension—possibly in exchange for a commitment to revisit at short notice. Ultimately, a slowing global economy would seem to favour the Russian position of lowering prices to encourage demand.

Wake up smarter with an assessment of the stories that will make headlines in the next 24 hours. Download The Daily Brief.