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Saudis Aim To Reach Consensus On Output Deal Before Summit

De facto OPEC leader Saudi Arabia plans to reach a consensus on the future of the bloc’s production limits prior to the deal’s one-year anniversary in November, according to comments by Saudi Foreign Minister Khalid al-Falih on Friday.

“I am looking forward to reaching a consensus, working with you in the next few weeks before we have the Nov. 30 meeting,” Falih said to Alexander Novak, his Russian counterpart.

Russian President Vladimir Putin – a key non-OPEC country that synchronized an output reduction with the bloc’s plans – said Moscow could sanction lower production through the end of next year, if need be. So far, the deal is due to last until March 2018.

“As satisfied as we are with the progress made, I think you agree that our job is not done and there are still uncertainties and headwinds on global oil markets,” Falih continued, in a conversation with Novak at a press conference. “We have to keep our eyes clearly on the road and our hands on the wheel.”

Saudi King Salman is on a state trip to Russia this week in a bid to cement an economic relationship with the former rival. The visit to Moscow is a first in Saudi history and follows a slew of deals between Russian oil and gas majors and Riyadh’s prized fossil fuel company, Saudi Aramco.

Related:The Permian Boom Is Coming To An End

“Relations between Russia and Saudi Arabia have been stably improving,” he said. “(They) clearly went to a quite new level after the visit by the King.”

An extended production reduction agreement would allow prices to rise as the KSA prepares an initial public offering for Aramco in 2018. The sale would offer five percent of the state-owned company’s assets to private investors in the largest financial event of its kind in modern history.

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By Zainab Calcuttawala for Oilprice.com

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  • Neil Dusseault on October 08 2017 said:
    Actually, OPEC de facto kingpin Saudi Arabia can do much to control the price of oil...it's called jawboning--they do it far too often. Really, all they ever do is talk about getting together with others at a future date to discuss options and I guarantee you oil will be up 3-4% that day alone on such 'news'. And, as much as I'd like to wish otherwise, U.S. shale simply can not do anything to bring oil back into the $20s/bbl again (as it was early last year). The very nanosecond that oil prices dipped back into the $39s last year after more than doubling the price of oil in the same year ($26.05/bbl to mid-$50s on front-month contracts) there was KSA jawboning and boom! Never to see oil in the $30s anymore--as Permian to Bakken require at least $40/bbl to sustain business (and look at the rig count data--plateaus at about $50/bbl as everyone wants $60/bbl on WTI and at least $65/bbl on Brent). I understand your sentiment, but it doesn't work that way.
  • Naomi on October 07 2017 said:
    OPEC & Russia cannot control the price of oil. If $50/bbl does not cover their costs then cut costs. Smile or those who do control the price of oil can make it $25/bbl

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