Saudi Arabia said it was not in talks with Russia to balance oil markets despite an attempt by Moscow to increase the members of the Opec+.
“There have been no contacts between Saudi Arabia and Russia energy ministers over any increase in the number of Opec+ countries, nor any discussion of a joint agreement to balance oil markets,” an official from Saudi Arabia’s energy ministry was quoted as saying by Reuters in reference to the wider grouping of oil producers.
A three-year supply pact between the Organization of the Petroleum Exporting Countries (Opec) and other producers, including Russia, fell apart this month after Moscow refused to support Riyadh’s plan for deeper production cuts, prompting Saudi Arabia to pledge to raise output to a record high.
The comment came after a senior Russian official said on Friday that a larger number of oil producers could cooperate with Opec and Russia.
“Joint actions by countries are needed to restore the (global) economy ... They (joint actions) are also possible in the Opec+ deal’s framework,” said Kirill Dmitriev, the head of Russia’s sovereign wealth fund.
Dmitriev and Energy Minister Alexander Novak were Russia’s top negotiators for the previous Opec pact, which officially expires on March 31. Dmitriev declined to say which nations could be included in a new deal.
The deal between Opec and Russia broke after Moscow declined to support bigger output curbs arguing that it was too early to estimate the impact from the pandemic, said the report.
Officials and oil executives in Russia have been split on the need for cuts with Dmitriev and Novak supporting co-operation while the head of Kremlin oil major Rosneft Igor Sechin has criticised the cuts as providing a lifeline to the less competitive US shale industry.
President Vladimir Putin has said little since the Opec + deal collapsed.
Saudi Arabia’s latest move has put Washington in a difficult position - its battle for market share has led to very low prices but also undermined the US shale industry, which has much higher costs than Saudi or Russia production.
The US administration is facing multiple calls to save the highly leveraged shale industry, which has borrowed trillions of dollars to allow the country to become a large oil and gas exporter despite often uncompetitive costs, stated the report.
A group of six US senators wrote a letter to state secretary Mike Pompeo this week saying Saudi Arabia and Russia “have embarked upon economic warfare against the US” and were threatening US “energy dominance”.
US President Donald Trump had last week said that he would get involved in the oil price war between Saudi Arabia and Russia at the appropriate time, the report added.
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