Wednesday , October 5 2022

Russia aims to increase oil production if there is no agreement on Saudi Arabia


Russia aims to increase its raw material by another 300,000 barrels per day by the beginning of next year, unless it is agreed with Saudi Arabia to reduce production, two people aware of the Financial Times plan said.

Since June, Moscow has drained the area and is returning to drilling new fields and increasing production to a post-Soviet high of 11.5 million B / d as part of an agreement with Riyadh to keep oil supplies well because US sanctions threaten oil exports from Iran.

Production growth in Russia, which has fallen by almost 450,000 b / d since May, with its own production in Saudi Arabia and higher production in the United States, threatens to overcome oil markets and prices will fall by 17 percent last month to $ 71 a barrel .

The US decision to issue more exemptions to customers than expected when they sanctioned again this week helped deliver the oil market that deliveries could be much higher than expected just a month ago when the raw material was at a level of four years $ 86 per barrel.

Riyadh says he is pushing Moscow to consider slowing output in the new year to help boost prices and keep the market balanced.

Russia, however, at this stage believes it hesitates to agree on cuts. Their oil companies are trying to bring new production that has been linked to Riyadh in Moscow, which has been curtailed over the last two years, which has reduced production from the beginning of 2017 until this summer.

"[Russia] can add between 200,000 and 300,000 b / d in a short period of time – within a few months, "said one of the people, but added that it depends on future decisions with its allies in Opec.

People familiar with the idea of ​​Saudi Arabia have said it would be silly to cut off cuts at this stage if the market in 2019 would get a significant surplus, but it will not allow shortcomings to develop.

The oil ministers of both countries, Khalid al-Falih and Alexander Novak, are due to meet this weekend in Abu Dhabi as members of the expanded "Opec +" group to assess market developments ahead of the official Opec ministerial meeting in Vienna next month.

Mr. Novak is expected to discuss with Russian oil companies to discuss this issue on Thursday, FT said.

Any decision to stop oil supplies may be politically difficult for Saudi Arabia. His move to increase output this summer was triggered by a call from the US, its major Western ally to help keep prices in check.

While US midterm elections are out of the way, removing the threat of higher oil prices as the immediate political issues for US President Donald Trump, Washington is still unlikely to kindly try any move by Saudi Arabia to raise prices. Relations between countries were also burdened with the slaughter of US journalist Jamal Khashoggi.

Helima Croft at RBC Capital Markets says that the kingdom may "regret the other or guess the decision to pre-load such an increase in production before the sanctions come into force."

Gary Ross of the Black Gold Oil Fund said Saudi Arabia is "laser-focused" at the global levels of inventories that have risen in recent weeks and "let it get out of hand."

"The United States is a snooker with a few exceptions for Iran and Saudi Arabia has now to adjust again," he said, adding that he believes that a 1m b / d reduction would be needed to keep the market in balance when the Opec + meets in December.

Iranian governor Opec, Hossein Kazempour Ardebili, said that he was particularly in favor of Saudi Arabia and Russia and accused them of striving for the US and trying to steal Iran's customers.

"There is a growing feeling among all producers that both have overtaken the market, cheated Americans with rhetoric and crossed their borders without OPEC," said Mr. Kazempour.

Source link