Home » World » OPEC+ Meeting Begins to Address Falling Oil Prices Amid Tensions between Moscow and Riyadh.

OPEC+ Meeting Begins to Address Falling Oil Prices Amid Tensions between Moscow and Riyadh.

The meeting of ministers of the Organization of the Petroleum Exporting Countries and their partners in the OPEC + bloc began on Sunday to try to find a solution to the falling oil prices, including the possibility of cutting production, against the backdrop of tension between Moscow and Riyadh.

The ministers of the 13 member states of the Organization of the Petroleum Exporting Countries (OPEC), who met Saturday at the organization’s headquarters in Vienna under the auspices of Saudi Arabia, were joined by their ten partners, led by Russia.

This meeting, the second in the Austrian capital since March 2020, began on Sunday afternoon, three hours behind the previously scheduled date.

A source familiar with the discussions said a cut of 1 million bpd was mooted, but the outcome of the meeting was still uncertain.

And the representatives of OPEC countries remained silent about their intentions when the delegations arrived at the cartel’s headquarters, where a crowd of journalists was waiting for them.

“There were no discussions about the volume of production,” Iranian Deputy Oil Minister Amir Hossein Zamannia told AFP after an introductory meeting, noting that “everything is on the table” on Sunday.

And the Saudi Oil Minister, Prince Abdulaziz bin Salman, contented himself with commenting on the weather, evading answering journalists’ questions.

As for his Emirati counterpart, Suhail bin Mohammed Al Mazrouei, he said he was “looking forward to a decision that would achieve market balance,” without adding any details.

Oil prices have improved over the past two sessions, but have fallen by about 10 percent since the surprise announcement by OPEC Plus members in early April of a significant cut in production quotas.

The measure did not actually raise prices in a market depressed by fears of a global recession, interest rate hikes by major central banks and a slow recovery in demand in China as anti-Covid restrictions expire.

The price of a barrel of Brent oil for the North Sea, the reference for crude in Europe, reached $ 76 a barrel, while the price of West Texas Intermediate crude is $ 71, far from the peak recorded in March 2022 at the beginning of the conflict in Ukraine, which amounted to about $ 140.

In the face of the difficult economic situation, “the possibility of a new cut has increased significantly,” Giovanni Stonovo of the UBS Group told AFP.

The analyst expects the status quo to be maintained, but other analysts such as Youssef Al-Shammari of the C-Markets group have modified their expectations. Al-Shammari said he expected Saudi Arabia to “press for a reduction of at least half a million barrels per day.”

It remains to be seen whether Riyadh will succeed in persuading Russia, which seems reluctant to further tighten the flow of black gold, whose revenues help it finance its military offensive.

Barbara Lambrecht of the “Commeters Bank” group said that Russian Deputy Prime Minister Alexander Novak “believes that there is no need for OPEC + to change course.” This is because Moscow hardly benefits from an increase in prices.

Because of Western sanctions, Russian oil, whose price exceeds sixty dollars, cannot be delivered. And if it exceeds this price, companies are prohibited from providing services that allow marine transportation, such as shipping, insurance, and others.

“On the other hand, Saudi Arabia needs higher prices to balance its budget,” Lambrecht added, noting that the profit threshold is around $80 a barrel for Riyadh.

Despite these differences, Lambrecht believes, “the two main producers of the cartel will no doubt be keen to maintain a united front to maintain their influence.”

And in the last major dispute between them in March 2020, Russia refused to cut its production to support prices, which fell significantly due to the Covid-19 pandemic.

After that, Saudi Arabia flooded the market with oil, which led to a prolonged decline in prices.

Youssef Al-Shammari believes that “Saudi Arabia does not want this scenario to happen again, and Russia does likewise.”

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2023-06-04 14:30:13

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