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Saudi-Russian Consensus Reassures Oil Markets

Saudi-Russian Consensus Reassures Oil Markets

Monday, 3 December, 2018 - 15:15
Saudi Crown Prince meets Russian President on the sidelines of G20 Summit. AFP
London- Asharq Al-Awsat
The meeting between Saudi Crown Prince Mohammed bin Salman and Russian President Vladimir Putin on the sidelines of G20 Summit in Argentina was positively viewed.

The two parties discussed restoring balance to the global oil market with a consensus on the extension of the so-called "OPEC plus" agreement, which stipulates cutting production.

Oil markets suffered deep confusion last month and ahead of a meeting among OPEC member states, Russia and other major oil producers in Vienna on December 6 and 7 to discuss oil market conditions as prices dropped due to oversupply.

Most analysts and observers noted that the consensus between two of the world's largest oil producers would restore discipline and confidence to markets.

On Saturday, Putin said that Russia has yet to decide on how much production it would cut, underscoring the remaining challenges ahead.

“There is no final decision on volumes, but together with Saudi Arabia we will do it,” Putin told reporters about extending the agreement in Buenos Aires.

“And whatever number there will be based on this joint decision, we agreed that we will monitor the market situation and react to it quickly.”

OPEC and non-OPEC member states' agreement on production cuts, known as OPEC Plus, came into force in early 2017 and was later extended until the end of 2018.

At the end of last week, Putin said the credit was largely given to Saudi Arabia and Crown Prince Mohammed bin Salman that OPEC members have fully committed for the first time to reduction in production.

“You know that we have established a business with OPEC states, in which 15 member states and 12 non-OPEC countries agreed to work together on world markets to balance supply and demand,” Sputnik quoted Putin as saying.

OPEC’s President UAE Energy Minister Suhail al-Mazrouei said on Sunday he was optimistic OPEC+ will reach an agreement over a reduction in production for 2019 when they meet.

“Technical teams are working on the level of the cuts necessary and the reference baseline for the reduction,” he said.

“I am optimistic that we will reach a good solution and a good agreement to adjust production downward, to cut production, to ensure that we keep the market stability and keep the OPEC and non-OPEC together as well,” Bloomberg quoted Mazrouei as saying upon his arrival in the Austrian capital.

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