Disir
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- Sep 30, 2011
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Long story short: as oil held its biggest loss in three weeks following the meeting, Saudi Arabia’s Energy Minister said the cuts are working and stockpile reductions will accelerate in the third quarter, with inventories falling to the five-year average early next year.
Moreover, according to Russia’s Energy Minister Alexander Novak, producers have more tools to further support prices if needed.
Oil producers need to do more
The efforts of Saudi Arabia and Russia to extend their output restraint until March 2018 initially rallied crude oil prices, but dropped after more countries joined the deal in Vienna on May 25.
This indicates that oil producers either need to do more to stem the glut or be prepared for a further slide in prices in due course.
....Both Saudi Arabia and Russia are hopeful about a price hike in the medium to longer run. This optimism emerges more from necessity than market realities. Higher oil prices and consequent increase in revenues would help the two countries tackle their domestic economic and social problems better, which is key to political stability.
While presidential elections are due in Russia in March 2018, Saudi Arabia has resorted to austerity measures and even borrowed money from foreign investors to overcome budget shortfalls. Failure to make adequate alternative arrangements has led to unrest in some oil-producing countries like Venezuela and Nigeria, among others.
At another level, Saudi-Russia cooperation in the realm of oil also lends hope for better teamwork in the regional political arena, where the two countries are transfixed on opposite poles.
As OPEC extends deal, Saudi-Russia pact struggles to boost oil price
They are not really worried about the US shale production but noted it is important.
Moreover, according to Russia’s Energy Minister Alexander Novak, producers have more tools to further support prices if needed.
Oil producers need to do more
The efforts of Saudi Arabia and Russia to extend their output restraint until March 2018 initially rallied crude oil prices, but dropped after more countries joined the deal in Vienna on May 25.
This indicates that oil producers either need to do more to stem the glut or be prepared for a further slide in prices in due course.
....Both Saudi Arabia and Russia are hopeful about a price hike in the medium to longer run. This optimism emerges more from necessity than market realities. Higher oil prices and consequent increase in revenues would help the two countries tackle their domestic economic and social problems better, which is key to political stability.
While presidential elections are due in Russia in March 2018, Saudi Arabia has resorted to austerity measures and even borrowed money from foreign investors to overcome budget shortfalls. Failure to make adequate alternative arrangements has led to unrest in some oil-producing countries like Venezuela and Nigeria, among others.
At another level, Saudi-Russia cooperation in the realm of oil also lends hope for better teamwork in the regional political arena, where the two countries are transfixed on opposite poles.
As OPEC extends deal, Saudi-Russia pact struggles to boost oil price
They are not really worried about the US shale production but noted it is important.
