Saudi Arabia And Russia Oil Agreement

The latest news about the effectiveness of coronavirus vaccines, which have pushed oil prices to their highest level since their fall in April, may have made it more difficult to reach an agreement. In response to these higher prices, some oil producers saw less need to maintain supply and wanted to increase pumps to try to improve nearly a year with gloomy oil yields. According to the sources, there is still no agreement on whether an OPEC production meeting is to take place on Thursday, the main obstacle being relations with countries that have not achieved the deep supply cuts required under the existing pact. Later, on 3 April, the Saudi foreign and energy ministers issued statements criticizing Putin and accusing Russia of not participating in the OPEC agreement. [38] “There has been no contact between Saudi Arabia and the Russian energy minister on the increase in the number of OPEC countries, nor any discussion of a common agreement to balance oil markets,” said an official from Saudi Arabia`s Energy Ministry, referring to the broader grouping of oil producers. “Any agreement on the extension of the cuts is conditional on countries that failed to fully comply with their cuts in May compensate for their overproduction,” the source said. As a result of the COVID 19 pandemic, plant production and transportation declined, which also led to a decline in aggregate oil demand and oil prices. [14] February 15, 2020, the International Energy Agency forecast that demand growth would fall to its lowest level since 2011, with growth of 325,000 barrels per day over the full year, to 825,000 barrels per day and a decline in consumption of 435,000 barrels per day in the first quarter. [15] Although global oil demand has declined, a drop in demand in Chinese markets, the largest since 2008, triggered an OPEC summit on March 5, 2020 in Vienna. At the summit, OPEC agreed to further reduce oil production by 1.5 million barrels per day by the second quarter of the year (an overall production cut of 3.6 million bpd from the original 2016 agreement), and the group is expected to review that policy on June 9 at its next meeting. [16] OPEC has asked Russia and other non-OPEC members to comply with OPEC`s decision. [13] On 6 March 2020, Russia rejected the request, marking the end of the unofficial partnership, as oil prices fell by 10% after the announcement.

[17] [18] Under the agreement, members of the Organization of Petroleum Exporting Countries, as well as Russia and other countries, will increase production by 500,000 barrels per day in January and possibly by a similar amount in subsequent months. The increase, less than 1% of the global oil market, comes at a time when demand is still under pressure from the coronavirus pandemic. On March 8, 2020, Saudi Arabia launched a price war with Russia, which facilitated a quarterly drop of 65% in the price of oil. [1] In the first weeks of March, U.S. oil prices fell by 34%, crude oil by 26% and Brent oil by 24%. [2] [3] The price war was triggered by a breakdown in the dialogue between the Organization of the Petroleum Exporting Countries (OPEC) and Russia over planned oil production cuts in the midst of the COVID 19 pandemic. [1] Russia left the agreement, which led to the downfall of the OPEC alliance.