Saudi Arabia, ready to increase its oil production after sanctions on Russian crude
Saudi Arabia has announced to Western allies that it is willing to pump more oil if Russia’s production falls sharply due to sanctions, the report said on Thursday. Financial Times. Saudi Arabia has resisted U.S. calls to speed up crude production ramp-up despite black gold prices currently trading around $120 a barrel, the highest level in a decade, the report added. FT.
Saudi Arabia believes it needs to keep excess production in reserve. However, fears of a severe supply shortage have risen after the European Union launched another round of sanctions against Moscow, including a ban on importing sea cargoes of Russian oil to the bloc. “Saudi Arabia knows about the risks and that it is not in its interest to lose control over oil prices,” he told the FT a source who has knowledge of the country’s position.
Saudi Arabia’s view is that while the oil market is undoubtedly tight, which has driven prices higher, there is still no real shortage, several diplomats have said. But this could change as the global economic recovery from covid-19, including the reopening of major cities in China, boosts demand, while the probability that Russia’s oil production will decline substantially has increased. British Business Journal article.
Russia produced more than 10% of the world’s oil before its invasion of Ukraine. Saudi Arabia has repeatedly rebuffed calls from the White House and the G-7 to speed up production increases, but several visits in recent weeks by a high-level US delegation, including Brett McGurk, Middle East policy coordinator for the White House, and Amos Hochstein, the White House energy envoy, have helped improve the relationship, according to a person familiar with the matter.
People familiar with the talks said Saudi Arabia had agreed to a change of tone to try to calm prices as part of a rapprochement with the Joe Biden administration, while also offering assurances that it would eventually respond by increasing production in the event of a supply crisis hitting the oil market.
OPEC + (the cartel of oil exporting countries extended with Russia and other states) meets virtually this Thursday to study whether any country increases its quota so that prices do not skyrocket even more after the fall in Russian production due to the sanctions. (Agencies and EL PAÍS)