Saudi Arabia Wanted Oil Production Cuts That Even Surprised Russia

Mohammad bin Salman and Vladimir Putin. AP Photo/Natacha Pisarenko  

The Intercept: Saudis Sought Oil Production Cut So Deep It Surprised Even Russia  

OPEC+ slashed oil production following a Saudi pressure campaign that experts say aims to hurt Democrats in the midterms. 

The Saudi-led oil cartel OPEC+’s announcement earlier this month that it was cutting 2 million barrels of oil per day — a move that would drive up the price of oil just a month before midterm elections — rankled Democrats in Washington. They accused Riyadh of aligning itself with Russia, another powerful member of OPEC+, which would indeed profit off the move. “What Saudi Arabia did to help Putin continue to wage his despicable, vicious war against Ukraine will long be remembered by Americans,” said Senate Majority Leader Chuck Schumer. 

But Saudi Arabia actually pushed to cut oil production twice as much as Russian President Vladimir Putin, surprising the Russians, two Saudi sources with knowledge of the negotiations told The Intercept, suggesting that Riyadh’s motives run deeper than what top Democrats want to admit. The sources requested anonymity, fearing reprisal by the Saudi government.  

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WNU Editor: I agree with the above analysis that the Saudis want to hurt the Democrats in the midterms, and it looks like they will succeed. 

Here is a prediction. If the US Democrats lose control of the Senate and House, they will blame the Saudis. 

On a side note. Expect even higher gas prices next month .... Oil Will Surge By More Than $30/bbl To "Well Over $100" After The Midterms (Zero Hedge).

Russia - Saudi Arabia Planned Meeting Over Oil Price Collapse Falls Apart

Saudi Arabia's Minister of Energy Prince Abdulaziz bin Salman Al-Saud and Russia's Energy Minister Alexander Novak are seen at the beginning of an OPEC and Non-OPEC meeting in Vienna, Austria December 6, 2019. REUTERS/Leonhard Foeger/File Photo

Reuters: OPEC+ meeting delayed as Saudi Arabia and Russia row over oil price collapse: sources

DUBAI/MOSCOW (Reuters) - OPEC and Russia have postponed a Monday meeting to discuss oil output cuts until April 9, OPEC sources said on Saturday, as a dispute between Moscow and Saudi Arabia over who is to blame for plunging crude prices intensified.

The delay came amid pressure from U.S. President Donald Trump for the Organization of the Petroleum Exporting Countries led by Saudi Arabia and its allies, a group collectively known as OPEC+, to urgently stabilise global oil markets.

Oil prices hit an 18-year low on March 30 due to a slump in demand caused by lockdowns to contain the coronavirus outbreak and the failure of OPEC and other producers led by Russia to extend a deal on output curbs that expired on March 31.

OPEC+ is working on a deal to cut the production of oil equivalent by about 10% of world supply, or 10 million barrels per day, in what member states expect to be an unprecedented global effort including the United States.

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WNU Editor: I agree. Oil prices are going to crater When the markets open on Monday .... Oil set to ‘crater’ Monday as OPEC meeting delayed, tensions flare between Saudi Arabia and Russia (CNBC).

OPEC And Russia Will Probably Extend Oil Production Cuts At Upcoming Meeting

Russia’s President Vladimir Putin waves to the media prior to a meeting of leaders of the BRICS emerging economies at the Itamaraty palace in Brasilia, Brazil, Thursday, November 14, 2019. Pavel Golovkin, Pool via Reuters

CNBC: OPEC and Russia likely to extend oil production cuts at upcoming meeting

* OPEC and Russia, or OPEC Plus, meet in Vienna next week, and it is widely expected oil ministers will extend their production cut agreement to June or even the end of next year.
* There are rumblings that Russia has not been happy with the structure of the deal, and may want to find a way to limit participation.
* The meeting coincides with the initial public offering of Saudi Aramco, and there is also speculation Saudi Arabia may want to find a way to boost oil prices.

OPEC and Russia are likely to extend their oil production deal at least through midyear, but if they were to cut more output, as some speculate, it would blindside what has become a complacent market, analysts said.

The ministers head into the Dec. 5 and 6 meeting with oil prices near their highest levels in two months. OPEC and Russia and other allies have an ongoing agreement to reduce output by 1.2 million barrels a day, with the biggest cuts coming from Saudi Arabia.

“At this stage, it’s not perfect for a number of producers, but it’s not catastrophic either,” said Helima Croft, global head of commodities strategy at RBC. “We’re kind of treading water.”

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WNU Editor: Russia feels that OPEC members are taking advantage of the present oil production limits at Moscow's expense. And while there is some speculation in Russian media that Moscow will walk out at the next OPEC meeting, I still expect Moscow to keep to its commitments.

Who Is Running OPEC?

Russian President Vladimir Putin shakes hands with then Saudi Deputy Crown Prince Mohammed bin Salman during a meeting at the Kremlin on May 30, 2017 [Reuters/Pavel Golovkin]

Al Jazeera: Who runs OPEC? Russia, Saudi and the hunt for higher oil prices

Has the quest for higher oil prices forced Saudi Arabia to relinquish control of the cartel to Putin's Russia?

On the sidelines of the G20 summit in Japan, Saudi Arabia was successful in getting the Organization of the Petroleum Exporting Countries (OPEC) to extend oil production cuts until 2020.

But for Crown Prince Mohammed bin Salman (MBS), the price he paid may have been to sacrifice control of the oil cartel to Russia.

The Saudi economy needs oil prices around $80 a barrel to balance its budget. However, Russia only needs oil at $42 a barrel. This means Russia's rainy day fund has accumulated to $100bn from past production agreements.

So who is in OPEC's driver's seat, Saudi Arabia or Russia?

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WNU Editor: The 3 countries that are the current driving forces in global oil prices are Russia, Saudi Arabia, and U.S. frackers. So as much as Saudi Arabia may want higher oil prices, market forces are telling everyone no.

Russia And Saudi Arabia Agree To An Extension The Oil Output Deal

Reuters: Russia agrees with Saudi Arabia to extend OPEC+ oil output deal

OSAKA/VIENNA (Reuters) - Russia has agreed with Saudi Arabia to extend by six to nine months a deal with OPEC on reducing oil output, Russian President Vladimir Putin said, as oil prices come under renewed pressure from rising U.S. supplies and a slowing global economy.

Saudi Energy Minister Khalid al-Falih said on Sunday that the deal would most likely be extended by nine months and no deeper reductions were needed.

Putin, speaking after talks with Saudi Crown Prince Mohammed bin Salman, told a news conference the deal - which is due to expire on Sunday - would be extended in its current form and with the same volumes.

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More News On Russia And OPEC Agreeing To An Extension Of Their Oil Output Deal

Putin Says Russia and Saudi Arabia Agreed to Maintain Oil Cuts for as Long as 9 Months -- Bloomberg
OPEC and Russia Seek to Support the Price of Oil -- The New York Times
Russia Completes Its OPEC Takeover With Deal With Saudis -- Bloomberg

Saudi Crown Prince: OPEC And Russia Are Considering A 10-20 Year Oil Alliance

Photo from Bunkerist

Reuters: Exclusive: OPEC, Russia consider 10-20 year oil alliance - Saudi Crown Prince

NEW YORK (Reuters) - Saudi Arabia and Russia are working on a historic long-term pact that could extend controls over world crude supplies by major exporters for many years to come.

Saudi Crown Prince Mohammed bin Salman told Reuters that Riyadh and Moscow were considering a longer deal to extend a short-term alliance on oil curbs that began in January 2017 after a crash in crude prices.

“We are working to shift from a year-to-year agreement to a 10-20 year agreement,” the crown prince told Reuters in an interview in New York late on Monday.

“We have agreement on the big picture, but not yet on the detail.”

Russia, never a member of the Organization of Petroleum Exporting Countries, has worked alongside the 14-member cartel during previous oil gluts, but a 10-20 year deal between the two would be unprecedented.

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WNU Editor: This alliance makes sense. For oil producers it is in everyone's interest that prices stay high, and the only way to control that is via through production cuts. But will this be enough to curtail American energy frackers .... I doubt it. And as for a 10 - 20 year alliance .... considering the history of oil prices, markets, and production .... I doubt that such a rigid arrangement will survive that long.