Saudi Arabia and Russia blocked on Monday over whether their producers’ alliance should boost crude production amid a resurgent pandemic, delegates said after a day of talks ended without an agreement.
The Saudi-led Organization of Oil Exporting Countries, which has 13 people, met on Monday with 10 producers led by Russia, a group that together has been dubbed OPEC-plus, at the first monthly meeting to review world demand for oil. Last month they agreed to increase production by 500,000 barrels a day, which reduced their net cuts since the start of the pandemic to about 7.2 million barrels a day.
On Monday they were scheduled to decide whether to continue to increase production or suffer.
Saudi Arabia and most of the broader alliance maintained their permanence for at least another month, delegates said. These countries are concerned that a new variant of the Covid-19 virus threatens a resurgence of the pandemic, while vaccination programs are not advancing as quickly as expected.
“Even in this general optimistic environment, I want to urge caution,” Saudi Energy Minister Abdulaziz bin Salman said during the opening statements ahead of the online meetings. “Don’t risk what we’ve achieved to get an instant exciting benefit.”
However, Moscow pushed for an increase in production by another 500,000 barrels a day, delegates said. Russia sees a return to oil consumption and is concerned about the loss of market share of American producers, who are not subject to restrictions, these people said.
“We hope that by 2021 we can see the recovery in demand, including the result of vaccination that is already underway in many countries,” Russian Deputy Prime Minister Alexander Novak said before the meeting.
The group will meet again on Tuesday, hoping to resolve their differences. The news of the disagreement brought down oil prices. In recent operations in London, Brent, the international benchmark, fell 0.7% to $ 51.40 a barrel, while West Texas Intermediate had fallen 1.1% to 47 , $ 90 a barrel.
Saudi Arabia and Russia clashed last year over oil policy, effectively sparking a global price war when each opened its peaks and flooded the market. This developed just as the coronavirus was spreading rapidly from China to the rest of the world. Governments around the world began to block their economies and demand for oil fell.
Amid a sharp drop in prices, Saudi Arabia and Russia abandoned their rivalry and OPEC-plus agreed to cut 9.7 million barrels a day. Part of the agreement required the eventual reinstatement of production in increments of 2 million barrels per day. The first of this added production was posted online over the summer, while members agreed last month to bring in 500,000 more barrels a day in January.
Write to Benoit Faucon at [email protected] and Summer Said at [email protected]
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It appeared in the January 5, 2021 print edition as “Saudis, Russia Divided in Oil Production.”