Russia and Saudi Arabia urge all OPEC+ powers to join oil cuts

By News Desk
December 08, 2023

MOSCOW: Saudi Arabia and Russia, the world's two biggest oil exporters, on Thursday called for all OPEC+ members to join an agreement on output cuts for the good of the global economy only days after a fractious meeting of the producers' club.

Hours after Russian President Vladimir Putin went to Riyadh in a hastily arranged visit to meet Saudi Crown Prince Mohammed bin Salman, the Kremlin released a joint Russian-Saudi statement about the conclusion of their discussions.

This photograph shows Russia's President Vladimir Putin (L) and Saudi Crown Prince Mohammed bin Salman attending a welcoming ceremony ahead of their talks in Riyadh on December 6, 2023. — AFP

The Organization of the Petroleum Exporting Countries (OPEC), Russia and other allies agreed last week to new voluntary cuts of about 2.2 million barrels per day (bpd), led by Saudi Arabia and Russia rolling over their voluntary cuts of 1.3 million bpd.

"In the field of energy, the two sides commended the close cooperation between them and the successful efforts of the OPEC+ countries in enhancing the stability of global oil markets," said the statement released by the Kremlin.

"They stressed the importance of continuing this cooperation, and the need for all participating countries to join to the OPEC+ agreement, in a way that serves the interests of producers and consumers and supports the growth of the global economy," the statement, which was in Russian, added.

The Russian version used the word "join" while an English translation of the statement, also released by the Kremlin, used the word "adhere" to the OPEC+ agreement.

Saudi state news agency SPA said that the crown prince, known as MbS, and Putin had emphasised in their meeting the need for OPEC+ members to commit to the group's agreement.

Oil market sources said that such an explicit public remark from the Kremlin and the kingdom about "joining" cuts appeared to be an attempt to send a message to members of the OPEC+ club who had not cut or not cut enough.

The biggest member of OPEC excluded from the cuts is Iran, the economy of which has been under various U.S. sanctions since 1979 after the seizure of the U.S. embassy in Tehran. Iran is boosting production and hopes to reach output of 3.6 million bpd by March 20 next year.

After his return to Moscow from Saudi Arabia, Putin on Thursday held talks with Iranian President Ebrahim Raisi in the Kremlin, along with Russia's Deputy Prime Minister Alexander Novak and Defence Minister Sergei Shoigu.


Producer group OPEC+, the members of which pump more than 40% of the world's oil, had to delay its meeting over disagreements with African producers about output, though some traders said they suspected a deeper schism inside the group.

After the producers decided to cut supply, oil prices fell to a five-month low - a clear sign that the market had expected more forthright action from OPEC+.

Putin and MbS, who together control a fifth of the oil pumpedeach day, were shown smiling and engaging in an effusive handshake as Putin emerged from his car in the Saudi capital.

Both MbS and Putin, 71, want and need high prices for oil, the lifeblood of their economies. The question for both is how much of the burden each should take on to keep prices aloft, and how to verify the burden.

At the talks with MbS, Putin said that a planned visit by the prince to Russia had been changed at the last minute, prompting him to visit Riyadh.

"We awaited you in Moscow," Putin told MbS with a smile. "I know that events forced a correction to those plans, but as I have already said, nothing can prevent the development of our friendly relations." Putin then said: "But the next meeting should be in Moscow."

The crown prince said through a Russian translator that he was ready to do that.

"Then we are agreed," Putin said.

Oil up Oil prices rose on Thursday, a day after tumbling to a six-month low, but remained under pressure as investors worried about sluggish demand in the United States and China.

Brent crude futures were up 32 cents, or 0.4 percent, at $74.62 a barrel by 1613 GMT. U.S. West Texas Intermediate crude futures rose 48 cents, or 0.7 percent, to $69.86.

"With the largest global importer of oil (China) shuttering its thirst for crude, pressure remains on prices as the largest producer, the United States, continues with headline output," said PVM Oil analyst John Evans.

On Wednesday, the market was spooked by data showing U.S. output remains near record highs even though inventories fell, ANZ analysts said in a note.

U.S. gasoline stocks rose by 5.4 million barrels last week to 223.6 million barrels, Energy Information Administration data showed, more than quintuple the 1 million barrel build that had been expected.