Vladimir Putin and Saudi Arabia's Crown Prince Mohammed bin Salman discussed the OPEC+ agreement in a telephone conversation on Friday, the Kremlin says, as Russia and Saudi Arabia continue to coordinate a common approach to oil supply to the market.
"The conversation proceeded in a friendly manner, was constructive and informative. With this in mind, it was agreed to build up contacts in specific areas of cooperation," according to a statement from the Kremlin quoted by Reuters.
Saudi Arabia, OPEC's de facto leader and top producer, and Russia, leading a group of non-OPEC producers, have been coordinating supply to the market since the beginning of 2017 under the so-called OPEC+ agreement. In the past six years, the leaders of Saudi Arabia and Russia have regularly discussed the production deal in telephone calls.
Early this month, in a move that shocked markets and drew criticism from the United States, several major OPEC+ producers announced a surprise additional cut to production.
On April 2, a day before a regularly scheduled OPEC+ panel meeting, the biggest OPEC producers in the Middle East and several other members of the OPEC+ pact announced a total of 1.16 million bpd of fresh production cuts. OPEC heavyweights Saudi Arabia, Iraq, the United Arab Emirates (UAE), and Kuwait, plus OPEC's Algeria and Gabon, and non-OPEC Oman and Kazakhstan, announced the 1.16 million bpd cut. That's on top of Russia's current 500,000 bpd cut, which was extended until the end of the year.
Saudi Arabia will also cut 500,000 bpd and said the move was "a precautionary measure aimed at supporting the stability of the oil market."
The surprise cut indirectly helps Russia, the leader of the non-OPEC group in OPEC+. A tighter market and higher prices would mean increased prices even for Russia's discounted crudes, boosting oil revenues for Putin's war chest.
By Tsvetana Paraskova for Oilprice.com
Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More