Aha Dua Permata: Putin, MbS praise joint extension of voluntary oil supply cuts

Wednesday, 6 September 2023

Putin, MbS praise joint extension of voluntary oil supply cuts

EPA-EFE/YURI KADOBNOV . A day after Russia and Saudi Arabia announced they will extend production cuts until the end of the year, Putin and MbS stressed that the oil output cut agreements help ensure stability in the global energy market. The Kremlin added that the Saudi crown prince also thanked Putin for supporting his country's bid to join BRICS.

Russian President Vladimir Putin spoke over the phone to Saudi Crown Prince Mohamed bin Salman (MbS) and the two officials praised the cooperation between Moscow and Riyadh in the OPEC+ format, the Kremlin said on Wednesday.

The OPEC+ partners say production cuts that will be extended until the end of the year have stabilized the oil market.

The global leaders in oil production, Saudi Arabia and Russia, on Tuesday announced the extension of voluntary oil supply cuts to the end of the year, despite a rally in the oil market and analyst expectations of tight supply in the fourth quarter.

Russia will roll over its decision to reduce oil exports by 300,000 barrels per day, while Saudi Arabia will extend its voluntary oil output cut of 1 million bpd.

Kremlin said the leaders had been highly satisfied with cooperation between their countries within the framework of the OPEC+ group of leading oil producers.

“It was noted that the agreements reached on reducing oil production, combined with voluntary commitments to limit the supply of the commodity, make it possible to ensure the stability of the global energy market,” the Kremlin said in a readout of the call.

"The interaction between the two countries in the OPEC+ format was highly assessed. It was noted that the agreements reached to cut oil production, along with voluntary commitments to limit the supply of raw materials, help maintain stability of the global energy market," the Kremlin said in a statement released following Wednesday's call.

"The parties said they were pleased with progress in multifaceted cooperation between Russia and Saudi Arabia and discussed a number of current issues of further enhancing cooperation in trade, economic, transportation, logistics, and investment areas," it added.

On Tuesday, Riyadh and Moscow announced the extension of voluntary oil supply cuts until the end of the year, sending the price of Brent crude oil – considered the global benchmark for oil prices – up by two percent to $91.08.

This was the highest price since November of last year.

Per their agreement, the Gulf monarchy will continue its production cutback of 1 million barrels per day (bpd) until December. Russia’s oil-export export reduction of 300,000 barrels a day will be extended for the same duration.

The OPEC+ group of nations began cutting production in August last year, starting with a 2 million bpd cut. The massive cut came despite US demands that Gulf nations increase production to offset a fuel crisis stemming from western sanctions on Russia.