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Saudi Arabia, Russia Meet To Discuss Cooperation Ahead Of OPEC+ Meeting

Saudi Arabia’s Energy Minister Abdulaziz bin Salman met today in Riyadh with Russia’s Deputy Prime Minister and top OPEC+ negotiator Alexander Novak to discuss further cooperation between the two countries ahead of next week’s monthly OPEC+ meeting.

According to a tweet by the Saudi Energy Ministry, “The meeting discussed the latest developments in the work of the Saudi-Russian joint committee, and discussed opportunities for cooperation between the two countries within its framework.

The next OPEC+ meeting, scheduled for August 3, should see the end of the record production cuts that the extended cartel agreed in 2020 amid the demand destruction wrought on the oil industry by pandemic lockdowns around the world.

At the time, the group agreed to remove a combined 9.7 million barrels daily from global oil supply. Since then, OPEC+ has been gradually reversing the cuts but underperforming, prompting worry that not all of its members are capable of increasing their output in line with demand growth.

According to unnamed sources cited by Reuters, OPEC+ might consider keeping its production rate unchanged in September, although there will also be discussions of a moderate increase in output.

“OPEC production is constrained, though supplies are stabilizing in Libya and Ecuador. Under-investment in many member countries will keep production constrained,” ANZ Research said ahead of the meeting.

Analysts from Energy Intelligence also said a substantial hike in oil production from the OPEC+ group was unlikely to follow next week’s meeting, noting the spare capacity constraints of its members.

Only two OPEC members have considerable spare capacity—Saudi Arabia and the UAE—and both have indicated they are unwilling to tap it in response to calls from Europe and the U.S. to boost production in order to make up for lost Russian barrels as a result of Western sanctions.

By Irina Slav for Oilprice.com

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  • Mamdouh Salameh on July 29 2022 said:
    Saudi Arabia and UAE are producing at maximum and, therefore, they neither have a considerable spare capacity as the author wrongly claimed nor even a small capacity.

    UAE can only add an estimated 100,000 barrels a day (b/d) to its production while Saudi Arabia can’t without drawing some oil from its stockpiled oil.

    And with OPEC+ production cuts of 9.7 million barrels a day (mbd) since the height of the pandemic in April 2020 coming to the end. It is natural that the most influential members in OPEC+, Russia and Saudi Arabia, should meet and plan their strategy for their continued cooperation in the future.

    This is of paramount importance against a background of a most bullish and tight global oil market, robust demand and an ever-shrinking global spare oil production capacity including OPEC+’s.

    Dr Mamdouh G Salameh
    International Oil Economist
    Global Energy Expert

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