Russia and Saudi Arabia to Cooperate on Oil Supply

Russia and Saudi Arabia, the two largest crude exporters, have agreed to cooperate on oil markets. The Energy Ministry in Moscow said the country has no immediate plans to limit output to reverse plunging prices.

The two countries agreed that the oil market “must be free of attempts to influence it for political and geopolitical reasons,” Russian Foreign Minister Sergei Lavrov told reporters in Moscow today after a meeting with his Saudi counterpart. Oil exporters “have a right to take measures to correct these non-objective factors.”

Oil collapsed into a bear market this year as the U.S. pumps crude at the fastest rate in more than three decades amid signs of weakening demand. Russia and Saudi Arabia together account for about 25 percent of global output.

While the Russian government has discussed a cut, it has no current plans to reduce output to arrest the decline, according to Energy Minister Alexander Novak. It hasn’t made a final decision because the economy is heavily dependent on oil revenue, he said today in Moscow.

“We expect annual oil production levels of 505 to 520 million now and in the future,” Novak said.

Output of 505 million metric tons is equivalent to about 10.1 million barrels a day, while Saudi Arabia’s output last month was 9.75 million barrels a day last month, according to Bloomberg estimates. Oil and gas account for more than half of Russia’s budget revenue.

Saudi Arabia is the biggest producer in the Organization of Petroleum Exporting Countries, which meets Nov. 27 in Vienna to discuss its production ceiling.

via Bloomberg

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza