Russia, Saudi Arabia to set up task force to secure oil market stability

BEIJING, Sept 5 (Reuters) - Russia and Saudi Arabia agreed to set up a task force to review oil market fundamentals and to recommend measures and actions that will secure oil market stability, according to a joint statement issued on the sideline of G20 summit on Monday.

Saudi Arabia has signed an agreement to seek cooperation in the oil market with Russia, Energy Minister Khalid al-Falih said at a news conference at the G20 in the eastern Chinese city of Hangzhou.

Russian Energy Minister Alexander Novak said at the news conference that cooperation with Saudi Arabia includes ways to stabilize global oil markets, including limiting oil output.

Russia and Saudi Arabia are the world's first- and second-largest oil producers, respectively. </s> Russian President Vladimir Putin (right) and Saudi Arabia Deputy Crown Prince Mohammed Bin Salman (left) meet during the G-20 Summit in Hangzhou, China on Sunday (Anadolu photo)

HANGZHOU, China — The world's two biggest oil producers Saudi Arabia and Russia said Monday they had agreed to "act together" to try to stabilise oil prices, but failed to make headway on a production freeze.

The two nations "noted the particular importance of constructive dialogue and close cooperation between the largest oil-producing countries with the goal of supporting the stability of the oil market and ensuring a stable level of investment in the long term," the energy ministers from both countries said.

Their comments came in a joint statement after a meeting at the G-20 summit in China.

"To this end the ministers agreed to act together or in cooperation with other oil producers," the statement said, adding they had agreed to set up a "joint monitoring group" to offer recommendations aimed at preventing price fluctuations.

Russia's Energy Minister Alexander Novak described the announcement as marking a "new era" in cooperation between Russia and Saudi Arabia and insisted it would have a "critical significance" for oil markets, news agency Interfax reported.

But there were no details in the announcement on any elusive agreement to freeze oil output, just weeks before Moscow and OPEC meet in Algeria to discuss the crisis.

The globe's major oil producers have been unable to strike a deal on freezing output, due mainly to a dispute between Saudi Arabia and Iran over Tehran's desire to raise production levels after the lifting of sanctions.

Saudi Arabia's Energy Minsiter Khaled Al Faleh told Al Arabiya television channel there was "currently no need to freeze production" after meeting Novak.

"A freeze is one of the preferred options but it is not needed for the moment," he said.

President Vladimir Putin met Saudi Deputy Crown Prince Mohammed bin Salman on the sidelines of the G-20 on Sunday and said they would work to address a global glut and overproduction that has hammered prices for the past two years.

In an interview ahead of the meeting Putin — whose economy slumped into recession on the back of oil price falls — said that a freeze was "the right decision" and called for "compromise".

The oil market has been plagued by a stubborn supply glut that saw prices plunge to near 13-year lows below $30 at the start of 2016. While it has recovered recently, it is still well off highs above $100 seen in mid-2014. </s> MOSCOW (AP) — The world's two largest oil producers, Russia and Saudi Arabia, on Monday agreed to act together to stabilize global oil output, though it's unclear what that might entail.

Energy ministers Alexander Novak and Minister Khalid al-Falih met Monday on the sidelines of the Group of 20 nations' summit in China. A joint statement released by Russia said both ministers "recognized the need to restrain an excessive volatility of the oil market" and agreed to act together "in order to stabilize the oil market."

Novak and al-Fatih said they would chair the first Russia-Saudi task force on oil and gas in October.

Russia, which is not a member of the oil producing nations' group OPEC, this year supported calls to freeze production, but the efforts fell through after OPEC member Iran opposed the plan.

It was not clear from the joint statement what exactly Russia and Saudi Arabia would be prepared to do to help prop up the markets but the Russian minister mentioned a production freeze.

"We believe that the market right now is taking too long to balance out, it's been two years, and joint steps which were considered earlier this year including a production freeze could be a great help in helping to balance the markets as soon as possible," Russian news agencies quoted Novak as saying.

Speaking to reporters after the meeting, al-Falih, the Saudi minister, said in comments carried by the Interfax news agency that the freeze "is not the only solution" but refused to elaborate.

The price of oil jumped on the countries' statement. The U.S. contract rose 2.2 percent, or 99 cents, to $45.43 a barrel in electronic trading on the New York Mercantile Exchange. </s> Russia says discussing with S.Arabia parameters of output freeze deal

MOSCOW, Sept 5 (Reuters) - Russia and Saudi Arabia are currently discussing concrete parameters of an oil output freeze deal, Russian Energy Minister Alexander Novak said in a statement on Monday after talks with his Saudi Arabia counterpart.

"We have agreed with Saudi Arabia energy minister on joint actions aimed at stabilising situation on the oil market. We consider a production freeze the most efficient tool, concrete parameters are being discussed at the moment," Novak said. (Reporting by Katya Golubkova; Editing by Maria Kiselyova) </s> CLOSE

Russian President Vladimir Putin (L) meets with Saudi Arabia's Deputy Crown Prince Mohammed bin Salman (R) during the G20 Summit in Hangzhou, China, on Sept. 4, 2016. (Photo: Yuri Kochetkov, EPA)

Oil prices rose Monday after Russia and Saudi Arabia announced they would cooperate on stabilizing oil output.

The two top oil-producing countries plan to hold a Russia-Saudi Arabia task force on oil and gas next month, the Russian and Saudi energy ministers Alexander Novak and Minister Khalid al-Falih announced Monday in a joint statement at the G-20 summit in China.

Their countries "recognized the need to restrain an excessive volatility of the oil market" and agreed to act together "in order to stabilize the oil market," they said in the statement.

Neither offered specifics on what actions might be taken. Russia is not a member of OPEC (Organization of the Petroleum Exporting Countries), but earlier this year supported a freeze in production. Saudi Arabia also supported a freeze, however OPEC members Iran and Iraq were non-committal.



Russia is open to a freeze, Novak told BBC News, and called the agreement on a task force a "historical moment" between OPEC members and non-members.

Some sort of compromise is needed to bring stability to oil, Russian President Vladimir Putin said in a pre-G-20 interview with Bloomberg released Monday. "I would very much like to hope that every participant of this market that’s interested in maintaining stable and fair global energy prices will in the end make the necessary decision," he said.

Oil prices have risen more than 30% so far this year after hitting historic lows of below-$40 per barrel prices. However, they remain far below the $100 or more fetched two years ago.

Upon news of the Russia-Saudi Arabia statement, the price of Brent crude oil, used to price international oils, rose by 4% but then fell to 1% higher at $47.31 a barrel.

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Read or Share this story: http://usat.ly/2ctHeQe </s> Saudi formin says would go along with a freeze if oil producers agree one

LONDON, Sept 6 (Reuters) - Saudi Arabia said on Tuesday it would go along with a freeze in oil output if other producers agreed one but cautioned that Iran could foil any attempt to limit output.

"If there's a freeze, Saudi Arabia will go along with it and we are hoping there could be a meeting of the minds when this comes together," Saudi Foreign Minister Adel al-Jubeir told reporters in London.

"I believe again the spoiler will be the Iranians. You can't expect other countries to freeze while you reserve the right to increase your production. The Russian position is more in line with our position than not," he said. (Reporting by Estelle Shirbon; editing by Guy Faulconbridge) </s> The joint statement was signed by the country's energy ministers in China on the sidelines of a Group of 20 summit and followed a meeting between Russian President Vladimir Putin and Saudi Deputy Crown Prince Mohammed bin Salman.

Russian Energy Minister Alexander Novak said the two countries were moving toward a strategic energy partnership and that a high level of trust would allow them to address global challenges. Saudi Energy Minister Khalid al-Falih said the agreement would also encourage other producers to cooperate.

Oil prices LCOc1 soared almost 5 percent ahead of a news conference by the two ministers, but pared gains to trade up 2 percent by 6.30 a.m. ET as the agreement yielded no immediate action.

"There is no need now to freeze production ... We have time to take this kind of decision," Falih said.

"Freezing production is one of the preferred possibilities, but it does not have to happen specifically today."

Even if the Monday statement was short on action, it marks a significant development in the Russia-Saudi relationship. The two countries have been effectively fighting a proxy war in Syria and Moscow also sees itself as a big ally of Iran - Riyadh's arch-rival in the Middle East.

The Organization of the Petroleum Exporting Countries will hold informal talks in Algeria later this month, and is next scheduled to meet officially in Vienna in November.

Several OPEC producers have called for an output freeze to rein in the glut, which arose as supplies from high-cost producers such as the United States soared.

The price collapse of the past two years has hit the budgets of major producers such as Russia and Saudi Arabia while leading to unrest and social tensions is smaller producing nations such as Venezuela and Nigeria.

OPEC's de facto leader Saudi Arabia has also signaled willingness to cooperate as it faces budget pressures and seeks to float a stake in state-owned producer Aramco.

Venezuela, which has consistently pushed for a deal to boost prices, hailed the agreement as "an important step in coordinating joint action between the biggest OPEC member and one of the biggest non-OPEC producers".

Venezuela has presented an "alternative proposal" to be considered at the upcoming Algeria meeting that would help "stabilize both the volume of supplies to markets and the fair price for producers," the Oil Ministry said in a statement.

The statement did not offer further details on the proposal.

Any deal between OPEC and non-OPEC producer Russia would be the first in 15 years since Moscow agreed to cut output in tandem with the cartel at the turn of the millennium, although Russia never followed through on that promise.

Novak said he was open to ideas on what cut-off period to use if producer countries decided to freeze output.

If production is frozen at early-2015 levels, it would effectively mean an output cut as most producers - including Saudi Arabia, Russia, Iraq and Iran - have steeply boosted production since then.

Novak said outright oil production cuts may also be discussed.

In April, Russia was prepared to freeze output together with OPEC, but talks collapsed after Riyadh said it would agree to a deal only if Iran - OPEC's third-largest producer - participated.

Iran has argued that it needs to regain market share lost during years of Western sanctions, which were lifted in January.

Putin said last week that a new deal on oil output could involve some compromise on Iranian output.

"We believe that the oil market rebalancing has been rather delayed ... And certainly joint actions which were considered at the beginning of the year, including a freeze, could have drawn much nearer the date of rebalancing of the respective markets," Novak said on Monday.

"We are ready, if there is such a decision, to join" an oil output freeze, TASS news agency cited Novak as saying.

Oil prices collapsed to as low as $27 per barrel earlier this year from as high as $115 in mid-2014, but have since recovered to around $50.

"The market is getting better and we noticed that the prices reflect this (improvement)", said Falih. "A coordinated and appropriate, collective decision on production will help bring balance and reduce inventories in a more timely manner". </s> OPEC and non-OPEC producers on Saturday reached their first deal since 2001 to curtail oil output jointly and ease a global glut after more than two years of low prices that overstretched many budgets and spurred unrest in some countries.

With the deal finally signed after almost a year of arguing within the Organization of the Petroleum Exporting Countries and mistrust in the willingness of non-OPEC Russia to play ball, the market’s focus will now switch to compliance with the agreement.

OPEC has a long history of cheating on output quotas. The fact that Nigeria and Libya were exempt from the deal due to production-denting civil strife will further pressure OPEC leader Saudi Arabia to shoulder the bulk of supply reductions.

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Russia, which 15 years ago failed to deliver on promises to cut in tandem with OPEC, is expected to perform real output reductions this time. But analysts question whether many other non-OPEC producers are attempting to present a natural decline in output as their contribution to the deal.

“This agreement cements and prepares us for long-term co-operation,” Saudi Energy Minister Khalid al-Falih told reporters after the meeting, calling the deal “historic”.

Russian Energy Minister Alexander Novak told the same news conference: “Today’s deal will speed up the oil market stabilization, reduce volatility, attract new investments.”

Last week, OPEC agreed to slash output by 1.2 million barrels per day from Jan. 1, with top exporter Saudi Arabia cutting as much as 486,000 bpd. Falih said on Saturday that Riyadh may cut even deeper.

On Saturday, producers from outside the 13-country group agreed to reduce output by 558,000 bpd, short of the initial target of 600,000 bpd but still the largest contribution by non-OPEC ever.

Of that, Russia will cut 300,000 bpd, Novak said. He added it would be gradual and by the end of March Russia would be producing 200,000 bpd less than its October 2016 level of 11.247 million bpd – Russia’s highest production estimate so far.

Russian output would fall to 10.947 million bpd after six months, Novak said.

“They are all enjoying higher prices and compliance tends to be good in the early stages. But then as prices continue to rise, compliance will erode,” said veteran OPEC watcher and founder of Pira Energy consultancy Gary Ross.

Amrita Sen from consultancy Energy Aspects said: “Compared to two months ago when the prospects of a deal were fading rapidly, this is a huge turnaround. Skeptics will argue about compliance but the symbolism in itself cannot be understated.”

Ross added that OPEC would target an oil price of $60 per barrel as anything above that could encourage rival production.

Oil prices have more than halved in the past two years after Saudi Arabia raised output steeply in an attempt to drive higher-cost producers such as U.S. shale firms out of the market.

The plunge in oil to below $50 per barrel – and sometimes even below $30 – from as high as $115 in mid-2014 has helped reduce growth in U.S. shale output.

But it also hit the revenues of oil-dependent economies including Saudi Arabia and Russia, prompting the two largest exporters of crude to start their first oil co-operation talks in 15 years.

In April in Doha, an attempt to clinch a deal collapsed. Novak said talks between OPEC and non-OPEC had been rescued after Saudi Arabia replaced veteran oil minister Ali al-Naimi with Falih, who “had fresh views and ideas”.

Apart from Russia, the talks on Saturday were attended by or had comments or commitments sent from non-OPEC members Azerbaijan, Bahrain, Bolivia, Brunei, Equatorial Guinea, Kazakhstan, Malaysia, Mexico, Oman, Sudan and South Sudan.

Novak said OPEC and the non-OPEC countries at the meeting were responsible for 55 per cent of global output. Their joint reduction of around 1.8 million bpd would account for about 2 per cent of global oil supply.

Many non-OPEC countries such as Mexico and Azerbaijan face a natural drop in oil production and some analysts expressed doubts those declines should be counted as cuts.

Oman said it would cut output by 45,000 bpd and Kazakhstan said it would try to reduce by 20,000 bpd next year.

“While a lot of the countries are formalizing natural declines, cuts by Russia, Kazakhstan and Oman are real. Russia and Kazakhstan were between them expected to add 400,000 bpd to production next year,” Sen of Energy Aspects said. </s> FILE PHOTO - Saudi Arabia's Minister of State for Foreign Affairs Adel bin Ahmed Al-Jubeir speaks during a news conference with Russia's Foreign Minister Sergei Lavrov (not pictured) in Riyadh, Saudi Arabia March 4, 2019. REUTERS/Faisal Al Nasser

WASHINGTON (Reuters) - Saudi Arabia agrees with the United States that Iran was behind the suspected attacks on two oil tankers in the Gulf of Oman, Saudi Minister of State for Foreign Affairs Adel al-Jubeir said on Thursday.

“We have no reason to disagree with the secretary of state. We agree with him,” Jubeir told CNN. “Iran has a history of doing this.”

(This story corrects Saudi minister’s title in headline and first paragraph)
Russia and Saudi Arabia agree on a plan to manipulate oil output.