Russian President Vladimir Putin failed to add fuel to the fire of already tense relations with Saudi Arabia, despite pressure from Donald trump and his attempts to bring the two largest oil exporters to the negotiating table.
Putin’s statement that Saudi Arabia was the initiator of the collapse of the OPEC agreement+ and brought down oil prices in order to bankrupt the us shale industry, has caused protests in Riyadh and is suspended in the air has already announced a deal to reduce oil production.
The decision of the Saudis to increase oil production and 1.5 times its exports to enter the two-digit discounts flooding the market with cheap barrels, was connected “with the efforts to eliminate competitors, which extract so-called shale oil,” Putin said Friday at a meeting with representatives of major oil companies.
“This price needs to be below $ 40 per barrel. And they succeeded,” said Putin, adding that Russia “does not need” and this goal has never been set.
The statement of the Russian President “is not a word of truth”, said on Saturday the foreign Minister of Saudi Arabia Prince Parsel bin Farhan. It is Russia refused the deal, OPEC+ in early March, while Saudi Arabia and 22 of the country “tried to convince her to go the extra reduction in oil production and extend the agreement,” Bloomberg quotes the statement of the foreign Ministry of the Kingdom.
We will remind, in March the process of negotiations, Moscow’s position is most fully outlined, the Finance Minister Anton Siluanov. “If the Russian oil price balancing the budget is 42.4 per barrel, then they (the Saudis) – under 80” – he said, clearly hinting that if Riyadh requires expensive oil, then he needs to cut production.
That deal OPEC+ disadvantageous for Russia and promotes the interests of the United States, said “Rosneft” on behalf of the press Secretary Mikhail Leontiev. “Now let’s see how us shale will feel in the new conditions”, – he rejoiced on March 7 in an interview with Bloomberg.
Three weeks later, Russian oil companies were not up to joy. The price of Urals in Europe March 30 fell 10.5 per barrel, oil traders began to emerge with the sale of tanker loads across the Baltic sea because of the collapse in demand has left excess every fifth barrel, mined on the planet (20 million per day).
But even in the face of catastrophe to put differences Moscow and Riyadh seem to fail.
Negotiations OPEC+, originally scheduled for April 6, where, as expected, will discuss the transaction to reduce production to 10 million barrels per day, with the participation of Saudi Arabia, Russia, and probably in the USA, Canada and Brazil, postponed, reported Bloomberg and Reuters sources in the cartel.
Negotiations may be postponed from 6 to 9 April, final date not yet confirmed TASS two sources in the delegations. “You may reschedule for Thursday. But that’s not accurate,” said one of them. Another confirmed that April 6 is not the final date.
According to The Wall Street Journal, under the current transaction, Saudi Arabia may cut production by 3.5 million barrels a day, OPEC countries on 1,5 million, 2 million will be removed from the market countries in North America, including the United States. Russia is given a quota of 1.5 million barrels per day – 13% of daily oil production and about 30% of exports.
On expectations of the agreement, prices for Brent crude soared by 35% in two days – from 26 to 35 dollars for barrel, Russian Urals has risen in price by almost half, to 19.9 dollar per barrel.
The market nourishes hope, but the delay in negotiations is a “bad sign,” said the head of research Middle East and North Africa, Eurasia Group have been identified ayham Kamel.
“Putin’s statements can be attributed partly to attempt to save face” and justify the decisions that led to the collapse of oil prices, he says: “Putin does not want him blamed for the loss of American power industry”.
The situation is complicated by the fact that the collapse of OPEC+ “hurt feelings” of crown Prince Mohammed bin Salman, specifies the scientific Director of the International discussion club “Valdai” Fyodor Lukyanov. Saudi Arabia is almost single-handedly “pull” transaction, reducing production by 1.5-2 million barrels per day and allowing Russia to save raw dollars national welfare Fund, while limited to a symbolic participation in common efforts.
But the effect of breaking the agreement came as a surprise to everyone. “No one expected the total collapse of the oil market. Saudi Arabia and Russia lost control of the situation, – said Lukyanov. – They need to get out of this situation without losing face”.
Hardly it is possible in principle, skeptical senior analyst at Energy Aspects Amrita Sen. The US administration is unable to force kancevica to cut production; if not participating States, the production will not cut Russia, and without Russia’s participation in the transaction will not go the Saudis, she explains.
To put pressure on Russia, the US administration is planning the threat of sanctions. The possibility of new restrictive measures is considered in connection with the participation of Moscow of destabilizing the world oil market, reported The Wall Street Journal, sources in the White house.
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