Saudi Arabia, which leads OPEC +, continues its refusal to go along with the wave of sanctions against Russia, which the United States and the European Union seek to impose completely on energy products and the pillars of the Russian economy.
Saudi Energy Minister Prince Abdulaziz bin Salman hinted that the kingdom would stand by Russia as a member of the OPEC + group of oil producers, despite tough Western sanctions against Moscow and European Union efforts to ban Russian oil imports, according to the British Financial Times.
The Saudi Energy Minister explained that his country hopes to reach an agreement with OPEC +, including Russia, explaining that the world should appreciate the value of this alliance.
Previous comments were considered by the British newspaper as an important sign of Saudi Arabia’s support – a traditional ally of the United States – for Moscow, despite sanctions against Russia and attempts to isolate it and reduce its oil production.
global oil production
While energy consumers are facing record hikes in oil prices, at their highest level in a decade, the series of OPEC+ production cuts, first announced in April 2020, is expected to end within 3 months.
Riyadh is resisting Western pressure to increase crude production, aimed at lowering prices in the wake of Russia’s invasion of Ukraine, and has insisted there is no shortage of supply.
The Saudi energy minister said it was too early to tell what the new deal might look like, given the uncertainty in the market, but added that OPEC+ would increase production “if the demand is there.”
The prince pointed out that “with the devastation that we see now, it is too early to try to define the shape of the agreement, but what we know is that what we have achieved successfully is enough for people to say, there is an advantage, and there is value in being and working together.”
Russian production declines
OPEC+ is adhering to its agreement, in force since 2020, under which alliance members will increase total production by a modest amount of 432,000 barrels per day each month.
Despite this, sanctions against Russia have reduced Russian production since the beginning of the Ukraine war, as it fell from about 11 million barrels per day last March, to an average of 10 million barrels per day in April.
The International Energy Agency expects an additional drop of up to 3 million barrels per day, if Western powers tighten sanctions against Russia, which aim to reduce Europe’s dependence on Russian energy, including a ban on oil imports, at a time when India has increased its imports of Russian oil since the start of the war. .
Saudi Arabia’s role with Russia
Saudi Arabia, as the de facto leader of the Organization of the Petroleum Exporting Countries, and the world’s largest oil exporter, has been coordinating oil production quotas with Russia through OPEC+ since 2016.
The kingdom has been trying to follow a neutral path since the Russian invasion of Ukraine, as Crown Prince Mohammed bin Salman has spoken with Russian President Vladimir Putin twice since the invasion.
The Saudi Energy Minister blamed the high oil prices on the lack of global refining capacity and high taxes, stressing that the determining factor in the market is refining capacity and how to benefit from it.
He continued, “During the past 3 years at least, the world has lost about 4 million barrels of refining capacity, of which 2.7 million barrels have been since the start of the Corona epidemic.”
European dispute over Russia
With the start of the Russian invasion of Ukraine on February 24, the West tried to avoid the issue of imposing sanctions against Russia, due to the reliance of many EU countries on Russian oil and gas supplies, but later America and Britain banned Russian imports in March.
Despite this, European Union countries remain at odds over measures to phase out Russian oil supplies, and this month dropped a proposal to ban the EU’s shipping industry from transporting Russian crude.
The Saudi energy minister commented on the matter, saying there is a need to keep OPEC+ out of politics, as the alliance is required to make “orderly adjustments” to move forward amid uncertainty over coronavirus-related shutdowns in China, global growth and supply chains.
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