Russia’s president Vladimir Putin hopes Saudi Arabia does not begin to reverse the production cuts agreed in December to fill the gap of Iranian oil on global markets.
Responding to a question on the sidelines of an investment event in Beijing, Putin said “I hope this does not happen in the end - but theoretically speaking, we have agreements under OPEC+,” as quoted by Reuters.
“We have not received any information from our Saudi partners or anyone else, any OPEC members, indicating they are ready to quit the agreements,” the Russian president added.
Saudi Arabia said it was ready to start producing more oil should it be needed after the U.S. announced it would not be extending any Iranian oil import waivers after their May 1 expiry date. However, Khalid al-Falih also said at the time Riyadh will not rush into reversing the cuts, and will first wait and see how the market reacts to the end of waivers.
So far, the market reaction has been a little confusing. After an initial jump that was only to be expected, prices began sliding back down, and even a sizeable decline in drilling rigs in the U.S. two weeks ago failed to arrest the slide. Brent crude, after briefly touching US$75 a barrel, is now back at around US$71 and West Texas Intermediate has fallen from the US$65 highs it hit earlier this month.
The preparedness of Saudi Arabia and the UAE to step in to compensate for lost Iranian supply is certainly one reason for the price dynamics. Another continues to be rising production in the U.S., and a third could be the certainty that Iran will still find a way to ship its oil abroad despite the end of the sanction waivers.
The sentiment was last echoed by none other than Rosneft, Russia’s top oil producer. “No, we do not see such threats,” CEO Igor Sechin told Reuters in response to a question about whether the “maximum pressure” applied by Washington on Iran’s oil industry could result in a global oil deficit.
By Irina Slav for Oilprice.com
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