Saudi Arabia, Russia agree to recover oil market
By Nigar Abbasova
Russia and Saudi Arabia, the two oil giants, have agreed on certain measures, joint or in cooperation with other oil producers, to be taken with a view to stabilize the oil market, tackle weak prices and rein of oversupply, as well as maintain stability and provide sustainable level of long-term investment, TASS reported.
The two countries made a joint statement within the framework of the running G 20 Hangzhou Summit on September 5. The countries said they will set up a working group to monitor the oil market and come up with recommendations to promote stability.
The statement increased expectations of the possible deal on output freeze and oil prices rose following the announcement, the increase, however was below the anticipated level.
October West Texas Intermediate crude rose $1.05, or 2.4%, to $46.79 a barrel, while November Brent crude increased by $1.27, or 2.7%, to stand at $48.10 per barrel.
Russian Energy Minister Alexander Novak described the announcement as an "historic moment" in relations between OPEC and non-OPEC members, Interfax reported.
Novak added that the likelihood of a previously abandoned output freeze "could significantly bring closer the date of the relevant market balance."
Russian President Vladimir Putin earlier met with Saudi Deputy Crown Prince Mohammad bin Salman on the sidelines of the G20 summit in China’s Hangzhou. The sides vowed to boost dialogue between the two countries regarding bilateral ties and global challenges. Bin Salman underlined that cooperation between the two countries may lead to solid results with respect to developments on the oil market.
OPEC will hold informal talks in Algeria this month and member countries are scheduled to officially meet in Vienna in November. The Saudi energy minister and his Russian counterpart are expected to discuss how to cooperate under the new agreement in the upcoming meetings.
Putin earlier ‘shocked’ commodity traders on September 3, calling for a global freeze in oil output to normalize global energy stockpiles with demand to bring stability to the economies of oil dependent nations.
Some experts however argue that OPEC is not an organization, which is made up of Saudi Arabia and Russia, and the decision of other countries is also of great importance.
Attention of traders is focused on the result of the upcoming Algeria meeting, while speculation over it is currently the main factor that influences oil prices. Oversupply in the market has caused oil prices to fall from above $100 two years ago to below $30 earlier this year.
Several attempts to boost crude prices by freezing the oil output have failed in the past.
--
Nigar Abbasova is AzerNews’ staff journalist, follow her on Twitter: @nigyar_abbasova
Follow us on Twitter @AzerNewsAz