The world’s top two crude-oil producers have pledged to cooperate to stabilise global markets without announcing any specific measures to bolster prices.
“We have a number of tools at our disposal for joint actions,” Russian Energy Minister Alexander Novak said yesterday following a meeting with his Saudi counterpart Khalid al-Falih at the G20 summit in China. Russia would be ready to join an agreement among major producers to freeze output, he said.
Nevertheless, no concrete actions were announced at the joint press briefing in Hangzhou, and al-Falih subsequently told Al Arabiya television there’s no current need to cap production.
Oil pared gains after rising more than 5% earlier yesterday on speculation Saudi Arabia and Russia might detail a plan to drive up prices. Russian President Vladimir Putin said last week he’d like Opec and Russia to agree on an output freeze, boosting speculation that members of the Organisation of Petroleum Exporting Countries and other major producers might strike such an accord at talks this month in Algeria.
While Russian-Saudi cooperation is yet to yield firm steps toward steadying the market, a joint press conference between the two oil giants is rare. It shows a growing trust and understanding that collaboration is vital to oil’s recovery, the ministers said.
Supply and demand will come “more or less into balance this year,” al-Falih said. A “coordinated, appropriate, collective decision on production would help bring that balance.”
In a joint statement, the two countries confirmed they’ll hold further talks during the International Energy Forum in Algiers this month. They’ll also coordinate a bilateral working group on oil and gas cooperation in October and meet at the Opec ministerial summit in Vienna in November.
“We still cannot shoulder the responsibility alone; we will play the leadership role and we will catalyse others to join in,” al-Falih said. “We are optimistic that the Algiers meeting would provide a quorum.”
The oil ministers of the UAE and Kuwait responded to the briefing by welcoming joint efforts to balance the market.
A proposal to freeze output was derailed in April over Saudi Arabia’s insistence that Iran participate in any accord. Yet the effect of the prolonged slump in crude prices - stuck at half the levels seen two years ago - is giving oil-market forces cause to collaborate.
Putin has said that oil producers now recognise that Iran, which has mostly restored the output halted during three years of trade restrictions, deserves to complete its return to world markets.
Iran said yesterday that it’s ready to pump more oil, with state-run National Iranian Oil Co saying the country can raise production to 4mn bpd in two to three months from the current daily level of about 3.8mn.