Saudi Arabia and Russia May Stop Increase in Oil Production Following US Action

by time news

Saudi Arabia and Russia are planning to pause the recovery in oil production following the release of some of their strategic oil reserves by several large importers. The Wall Street Journal writes about this, citing sources familiar with the discussion.

According to the interlocutors of the publication, Riyadh is concerned that the decision of the United States and other countries to print reserves could cool world demand and affect prices. It is reported that there is no consensus in the OPEC + oil alliance on this issue: some countries, including the United Arab Emirates and Kuwait, do not see the need to stop the increase in oil production.

On the eve of the press service of the administration of US President Joe Biden announced plans to sell 50 million barrels of oil from the country’s strategic reserves to curb price increases. The release of 18 million barrels has already been approved earlier. The remaining 32 million will be sold on an exchange basis in the coming months. A similar amount is planned to be returned to the reserve fund after the situation with gasoline prices stabilizes. The decision was supported by other large consumers: India will use 5 million barrels from reserves, Japan – 4.2 million, Great Britain – 1.5 million. Also, China and South Korea announced plans to bring oil to the market, but the exact volumes are still unknown.

The United States made this decision after OPEC and other oil-exporting countries refused to increase oil production. Under an agreement in effect since August 2021, the cartel is increasing production by 400,000 barrels per day every month in order to make up for the 9.7 million b / d limits adopted at the height of the pandemic by the end of September 2022. Every month, OPEC + members discuss the parameters of the transaction, taking into account the market situation, the next such discussion will take place on December 2. Bloomberg reported that the OPEC + agreements could be revised, but possible scenarios were not named then.

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The actions of the United States and its allies did not have a big impact on the market. As of 18:57 Moscow time, the cost of January futures for WTI crude oil on the ICE exchange is $ 78.62 per barrel (+ 0.15% to the close of the previous session), Brent – $ 82.42 (+ 0.13%). Analysts believe that the concerted actions of the United States and its allies will allow for some time to keep prices in the range of $ 70-80 per barrel, but not for long.

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