Hangzhou: Saudi Arabia and Russia agreed to work together to ensure oil market stability even as leaders from the world’s two biggest crude producers stopped short of offering detailed proposals.
Oil-market stability is impossible without Saudi-Russian cooperation, the kingdom’s influential Deputy Crown Prince Mohammed bin Salman said after meeting on Sunday with President Vladimir Putin in Hangzhou, China. Prince Mohammed made his comments three days after Putin said he’d like Opec and Russia to agree to freeze crude supply to steady the market.
"Our countries are the two biggest oil producers, that’s why there can’t be a stable policy in the sphere of oil without the participation of Russia and Saudi Arabia,” said Prince Mohammed, a son of the Saudi king. Putin said it is important for the two countries to "maintain a permanent dialogue.”
Crude gained about six per cent since the Organisation of Petroleum Exporting Countries (Opec) said in August that it will hold talks in Algiers later this month. Producers have been discussing proposals to limit output after a glut cut prices by more than half from their 2014 peak.
Opec adopted a Saudi-led policy allowing members to raise output to protect market share from higher-cost producers in 2014. Group production rose to a record 33.69 million barrels a day in August, just under a third of global demand, a Bloomberg survey showed last week.
"Russia and Saudi Arabia talking constructively about a production freeze is going to be bullish for the market, whether or not they actually follow through with it,” Edward Bell, a commodities analyst at Dubai lender Emirates NBD, said on Sunday by phone from Dubai.
Putin told Bloomberg in an interview on Thursday that he’d like Russia and Opec to reach an oil output freeze, exempting Iran until it raises production to pre-sanctions levels. Iran has been boosting output since sanctions eased in January. The Russian president said last week that he might recommend the freeze proposal to Prince Mohammed in China.
The Saudi deputy crown prince and Putin didn’t discuss proposals on oil production, according to two officials who were at the meeting in Hangzhou. The discussions focused mainly on security and Syria, the officials said, asking not to be identified because the talks were private.
Talks about a Saudi-Russian proposal to freeze output ended without an agreement in April, after Iran, the group’s third-largest producer, declined to attend the meeting and Gulf rival Saudi Arabia balked at any accord that didn’t include all Opec members. Iran will support any measures to revive prices "while preserving its national interests” to regain market share, Mehr news agency cited Deputy Oil Minister Amir Hossein Zamaninia as saying on Saturday.