A rolling oil pact between Russia and Saudi Arabia which seeks to support prices by reducing output looks to be on shaky ground with only the Arab nation appearing to fulfil its promises.
Late last year, OPEC producing countries, and non-OPEC producers, led by Russia, agreed to cut supply by 1.2 million barrels per day(bpd), an arrangement known as OPEC+.
Saudi Arabia agreed to account for the bulk of OPEC nation cuts and has confirmed it will drop its crude oil production by a further 400,000 barrels per day to 9.8 million b/d in March. If achieved it would mean that since the December, Saudi Arabia has become responsible for 70 percent of the total OPEC+ target.
In turn, Russia was set to account for the greater share of non-OPEC cuts, but from October to the beginning of February had only decreased output by 47,000 barrels per day.
The slow pace to cuts from Russian oil producers drew criticism from Saudi Arabia’s Energy Minister Khalid al-Falih, who told CNBCin January that Moscow had moved “slower than I’d like.”
That barb led to a response from Russian Energy Minister Alexander Novak who said at the beginning of February that Russia was “completely fulfilling its obligations in line with earlier announced plans to gradually cut production by May this year.”
During 2018, oil prices were dragged lower by increasing U.S. shale supply and fears over global demand. President Donald Trump has repeatedly criticized OPEC on its decision making, claiming prices should be lower.
BY CNBC NEWS
