Russia: We Have a Common Position with Riyadh on Oil Deal

Daniel Fowler
May 27, 2018

That saw oil prices suffer their biggest fall for six weeks. Outside the Arab members in the Persian Gulf, most countries aren't able to boost supplies and would face lower revenue if prices slide further.

The rapid decline in oil inventories and worries about supplies after the US decision to withdraw from the worldwide nuclear deal with Iran, as well as Venezuela's collapsing output, were behind the change in OPEC's thinking.

"Looks like OPEC is at it again", the president wrote. "Oil prices are artificially High!"

"It is the intent of all producers to ensure that the oil market remains healthy, and if that means adjusting our policy in June, we are certainly prepared to do it", Al-Falih said.

"The tweet moved the Saudis", said Bob McNally, founder of consultant Rapidan Energy Group in Washington and a former White House oil official.

After al-Falih's comments, made following a meeting with his Russian counterpart in St. Petersburg, saw crude drop more than $3 today to below $67 a barrel in NY.

Meanwhile, it has been reported that large industrial consumers have increased their hedges as they are concerned that prices push higher. The most important ones - as reported by media - would be a ban on Iran over buying or acquiring United States dollars.

This hint of a gradual increase in supply has decreased the price of Brent crude futures by 0.5%. When OPEC, Russia and other major producers meet in June "we will do what is necessary" to reassure consumers, the minister said.

"We were in the meeting in Jiddah, when we read the tweet", OPEC Secretary General Mohammad Barkindo said today. "I think I was prodded by his excellency Khalid al-Falih that probably there was a need for us to respond", he said.

The JTC meeting precedes the producers' main gathering next month in Vienna, where they will evaluate the results of output cuts they've been making since January 2017.

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In early April Saudi Arabia had been advocating for higher oil prices and signaled the reductions would continue through this year. "What we will now do is to commit and get the approvals", said Baru.

He added that Iran's total exports of crude stood at an average of 2.5 million barrels per day (m/bpd), SHANA news agency reported.

OPEC and a group of non-OPEC countries led by Russian Federation have since January 2017 cut production by 1.8 million barrels a day in an effort to tackle the global supply glut that had pushed prices to multiyear lows.

"It is premature to talk about a specific figure, it must be carefully calculated..."

A steady course on U.S.

And with global oil demand growing strongly, hedge funds will shift their focus on diminishing global spare capacity as OPEC returns barrels to the market.

Iran's heavy crude oil also experienced a $2.03 rise in the said week to reach $73.58 per barrel.

Crude oil prices fell more than 4.5 percent in the past two days with a surprise increase in USA crude oil inventories and Russian Federation and Saudi Arabia signaling they could ease their production limit agreement.

There is a lag of at least a few days between the direction of oil prices and gasoline prices, with the acceleration in gas prices letting up in recent days.

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