Saudi Arabia and Russia have signed an agreement to cooperate over oil – setting up a task force to review market fundamentals and recommend measures and actions.
But Saudi Arabia’s Minister of Energy, Industry and Natural Resources Khalid bin Abdulaziz al-Falih also said there is currently no need to limit oil output, despite a glut of crude pulling down prices, hitting both their economies.
At the G20 meeting in Hangzhou, China he told reporters: “Russia and Saudi Arabia will benefit from their positions as oil market and production leaders. Both our countries have the same motivation, which is to stabilise international oil markets.”
But there will be no immediate action by the world’s two top producers, just talk of how to work together, which disappointed the commodities market.
Russia’s Energy Minister Alexander Novak said: “We agreed on coordination of joint actions aimed at stabilisation of oil markets and predictability.”
He told the Russian news radio station Kommersant-FM that a price of $50 to $60 a barrel would be fair, adding that producers are trying to maintain market share and because their output is not being coordinated there are long periods of low prices.
Putin on what’s fair
At the G20, Russia’s President Vladimir Putin also weighed in on the issue backing Iran’s desire to pump as much oil as it did before international sanctions were imposed on it.
At a news conference he said: “I believe it to be fair for Iran to reach pre-sanction levels of extraction. This request by Iran is not excessive.”
Iran’s desire to do that has prevented previous attempts by OPEC producers and Russia to cap output or reduce it.
Asked what prices should be, Putin said: “The price should be fair. Now it is not. It could be a bit higher. But taking into consideration the fact that that we planned our budget based on $40 per barrel it is fine for us. We are satisfied with today’s oil price in general.”
OPEC members are due to meet informally at the end of this month in Algiers to try to find ways to boost prices.
Brent crude jumped five percent before Monday’s announcement by Saudi Arabia and Russia but when traders realised there was no agreement to freeze production they slipped back again.