Saudi Arabia refuses to cut oil production by scenario Putin

Saudi Arabia and Russia to agree on a new agreement on the reduction of oil production due to the different approach to calculate the reduction. This writes Bloombergreferring to sources familiar with the negotiations.

So, Russian President Vladimir Putin expressed the opinion that the reduction in OPEC production+ (assuming it will be about 10 million barrels per day) should be the average level of production in the first quarter of 2020, when they had a previous agreement oil producers.

Saudi Arabia the proposal do not agree, and offers to cut production from the current level. Thus, notes Agency, in the last month Riyadh has significantly increased its hydrocarbon production and produces about 12 million barrels per day (a growth of about 9.8 million barrels per day).

Experts interviewed by the Agency, believe that “the chances of concluding the deal, which will provide a real reduction in the production of” small. Besides, the proposed reduction of 10-15 million barrels a day is not enough: an overabundance of oil on the market is estimated at about 35 million barrels per day.

The fall in oil prices continues since the beginning of March. The main reason was the fact that Russia and OPEC failed to agree on new restrictions the level of oil production. By 9 March the price of Brent crude oil has fallen by 30% – up to $33 per barrel, the biggest daily drop since 1991, when the war began in the Persian Gulf. On 18 March, the price of Brent crude oil has fallen to a 17-year low – $25,4 per barrel.

On the background of unsuccessful negotiations Saudi Arabia, according to sources Bloomberg, decided to “join the total price war” and increase production from 9 million to 12 million barrels per day. In addition, Riyadh has pushed Russian oil Urals on the European market, offering triple the supply of Arab Light grade with big discounts.

This led to the fact that, as of 31 March, the price of Urals dropped to the lowest level since 1999 – $13 per barrel. As noted by “Radio Liberty”, the Urals in Europe became cheaper fuel.

1 APR prices on the oil market began to rise amid expectationsthat Russia and Saudi Arabia will reduce production volumes.

On 2 April President of the United States Donald trump announced a preliminary agreement largest oil producers to reduce production by 10-15 million barrels per day. Against this background, the oil benchmark Brent crude rose by 16.3% to us $of 34.83 per barrel.

However, the negotiations stalled because of a public squabble between the authorities of Russia and Saudi Arabia about the reasons for the dissolution of the agreement OPEC+. So, Putin expressed the view that Riyadh is out of the transaction to eliminate competitors. “This, apparently, is connected with the attempts of our partners from Saudi Arabia to get rid of competitors, which extract so-called shale oil. In order to do this, the price should be below $40 per barrel. And in this sense they are, of course, your goal is to a certain extent succeed”, – quotes Putin’s Kremlin website.

The Minister of foreign Affairs of the Kingdom, Prince Faisal bin Farhan al Saud has called the President’s words “completely devoid of truth”. According to him, it was Russia that initiated the cancellation of the agreement OPEC+. He urged the Kremlin to take “the right decision” at an emergency meeting of the countries-oil producers on April 6th. It soon became known that the meeting is postponed at least until April 9.