Saudi Arabia and Russian Federation now produce more than 21 percent of oil that is required to fuel global economic growth, improve standards of living and help achieve the Millennium Development Goals. High spare capacity gives Saudi Arabia the advantage of raising crude oil production and pressuring crude oil prices.
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Most members of the Organization of Petroleum Exporting Countries that can raise production have indicated they will aim to do so, while others are already close to short-term limits. “Again”, Mike van Dulken, head of research at Accendo Markets, said. The Organization of the Petroleum Exporting Countries and non-OPEC producers such as Russian Federation will hold informal talks in Algeria on September 26-28. Saudi Arabia and other Arab countries have repeatedly refused to make any deal to reduce oil output without Iran involved.
Iranian oil production is surging after President Barack Obama ended years of sanctions, according to data compiled by Bloomberg.
Petrochemical stocks outperformed on Tuesday morning, with Saudi Basic Industries up 1.2 per cent, and miner Ma’aden rose 3.2 per cent after it said a subsidiary had started trial production at a new ammonia plant. Deputy Prime Minister Arkady Dvorkovich has said all OPEC members must reach consensus on a cap before Russian Federation will participate. Saudi Arabia insisted all producers take part, prompting the collapse of the talks.
Nigeria may also demand the right to restore production after militant attacks curbed output, while Libya will want to boost volumes that shrank to a fraction of pre-conflict levels.
Olivier Jakob from the Switzerland-based Petromatrix said that while it was clear no production freezes were on the horizon, the announcement suggested that both parties were happy to support a price floor.
A first meeting of the Russia-Saudi task force on oil and natural gas scheduled for this October should tell more about solutions.
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Seyed Mohsen Ghamsari, director of global affairs at National Iranian Oil Co, said on Monday Iran was ready to raise production to 4 million bpd in the next two to three months depending on market demand. Yet analysts remain skeptical a meaningful deal can be reached in Algiers.
