Saudi Arabia and Russia reach an agreement on oil output freeze

Go to Media center Saudi Arabia and Russia reach an agreement on oil output freeze

15 April 2016

Ifax cites diplomatic source in the capital of Qatar.
Earlier Er-Riyard refused to join negotiations without Iran.

Russia and Saudi Arabia reached a consensus about an oil output freeze, Interfax quoted a diplomatic source in Doha, the capital of Qatar. According to him, an agreement on key issue was reached: Saudi Arabia’s final decision on freezing oil production would not depend on Iran’s position about its own oil output. “The consensus about oil output freeze has been reached today during the talks between the representatives of Saudi Arabia and Russia», — Interfax reported. The information about the agreement was confirmed by RBC source in the Russian delegation.

Earlier, April 1st, royal prince deputy and Minister of Defence of Saudi Arabia, Mohammad bin Salman insisted that his country would only commit to a production cap if Iran and other major large producers follow suit. Iran stated several times it would not discuss oil production freeze until it reached production and export level existed prior to sanctions.

Moreover, Teheran informed, it was going not only to ramp up production up to 4 million barrels but to undersell the competitors. According to International Energy Agency (IEA) forecast, Iran can reach such production level only by 2020.

In February 2016 Russia, Saudi Arabia, Venezuela and Qatar agreed to freeze oil production at the level of January 2016 if other producers support such decision. As stated by the Russian Ministry of Energy the production cap initiative had been agreed by 15 countries. Minister of Energy Alexander Novak mentioned, that some document on production cap could be signed at the meeting in Doha, April 17.

In February 2016 the general secretary of Organization of Petroleum-Exporting Countries (OPEC), Abdala al-Badri, during his speech at the annual international oil and gas conference in Huston complained on «reactivity» of American shale oil production industry. According to him, American companies which produced shale would easily ramp up production and close the oil market gap if the price goes up due to the production cap made by other countries. He mentioned OPEC had never dealt with the oil source which could timely address the changing prices and supply the deficiency. Al-Badri added that it highly complicated the ability of the organization to control the price drop by falling production.