Saudi Arabia and Russia blocked on Monday whether their producers’ alliance should increase gross production amid a resurgent pandemic, delegates said after a day of talks ended without an agreement.
The Saudi organization, led by 13 organizations from oil-exporting countries, met on Monday with 10 Russian-led producers, a group dubbed OPEC-plus, in its first monthly meeting to review global oil demand. Last month, they agreed to increase production by 500,000 barrels a day, reducing net reductions since the beginning of the pandemic to about 7.2 million barrels a day.
On Monday, they were scheduled to decide whether to continue to increase production or rise.
Saudi Arabia and most of the wider alliance have maintained it for at least another month, delegates said. These countries are worried about a new variant of the Covid-19 virus threatening a recurrence of the pandemic, while vaccination programs are not progressing as fast as expected.
“Even in this general optimistic environment, I want to urge caution,” Saudi Energy Minister Abdulaziz bin Salman said during opening remarks ahead of online meetings. “Don’t jeopardize what we’ve accomplished for the sake of an instant illusory benefit.”
However, Moscow pressed for an increase in production by another 500,000 barrels per day, delegates said. Russia sees oil consumption recovering and is worried about losing market share to unrestricted US producers, the people said.
“We hope that in 2021 we will be able to return to the demand for recovery, including as a result of the vaccination that is already underway in many countries,” Russian Deputy Prime Minister Alexander Novak said before the meeting.
The group is due to meet again on Tuesday, hoping to close the gap. The news of the disagreement has reduced oil prices. In late London trading, Brent, the international benchmark, fell 0.7% to $ 51.40 a barrel, while West Texas Intermediary was down 1.1% to $ 47.90 a barrel.
Saudi Arabia and Russia clashed last year over oil policy, effectively triggering a global price war, as each opened its peaks and flooded the market. This happened just as the coronavirus was spreading rapidly from China to the rest of the world. Governments around the world have begun to block their economies, and demand for oil has fallen.
Amid a sharp drop in prices, Saudi Arabia and Russia have abandoned their rivalry, and OPEC-plus has agreed to cut 9.7 million barrels a day. Part of the agreement called for the resumption of production in steps of 2 million barrels per day. The first of this added production came online over the summer, while members agreed last month to bring in another 500,000 barrels a day in January.
Write to Benoit Faucon at [email protected] and Summer Said at [email protected]
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It appeared in the print edition of January 5, 2021 under the name “Saudis, Russia Split on Oil Output”.