Vienna [Austria], July 6: Saudi Arabia on Wednesday dismissed talk of discord with oil ally Russia, praising their coordinated decisions to remove barrels from the market in efforts to prop up prices. Oil producers are grappling with falling prices and high market volatility amid fears of global economic slowdown and the Russian invasion of Ukraine, which has upended economies worldwide. On Monday, Riyadh said that it would extend a production reduction of one million barrels per day (bpd), which began in July, to August to boost prices.
At the same time, its ally in the OPEC+ group of oil producers, Russia, decided to slash exports by 500,000 bpd in August. Speaking at an OPEC seminar in Vienna on Wednesday, Saudi Energy Minister Prince Abdulaziz bin Salman said the coordinated announcement was "quite telling". "Part of what we have done with the help of our colleagues from Russia was also to mitigate the cynical side of the spectators on what is going on between Saudi Arabia and Russia," he added. Moscow and Riyadh have not always talked with one voice regarding oil quotas, with Russia less enthusiastic than Saudi Arabia about cutting production as it needs the revenue amid its war in Ukraine and Western sanctions.
The latest cuts, however, have failed to drive up international oil prices. Analysts say the kingdom needs oil to be priced at $80 per barrel to balance its budget, which is well above recent averages. Brent North Sea crude, the international benchmark, was trading at around $75 per barrel on Wednesday. Estimates show that Russia, on the other hand, is far from reducing its production by the volume promised, and is concentrating on Asian markets such as India and China. Faced with these accusations, OPEC+ has called on "independent sources" to verify Russia's figures, said the Saudi minister.
Moscow has "committed to this exercise and they are going to be doing it on a monthly basis", he insisted. Asked about the markets' muted reaction to the recent production cuts, Prince Abdulaziz called for patience as he deplored the prevailing "negativism". "We will do whatever is necessary, whatever it takes" to stabilize prices, he added. OPEC did not invite journalists from three major financial news outlets - Bloomberg, Reuters and The Wall Street Journal - to cover the talks. Meanwhile, Saudi Arabia has said it enjoys "full rights" along with Kuwait to a disputed gas field in the resource-rich Gulf, pushing back against claims by Iran, state media reported late Tuesday.
The field, known as Arash in Iran and Durra in Kuwait and Saudi Arabia, falls under "joint ownership between the Kingdom of Saudi Arabia and the State of Kuwait, and they alone have full rights", the official Saudi Press Agency reported, citing a foreign ministry source. The Saudi statement appeared one day after Kuwait reinvited Iran to participate in talks on their sea borders. The dispute over the field - whose recoverable reserves are estimated at some 220 billion cu m - dates back to the 1960s, when Iran and Kuwait awarded overlapping offshore concessions.
Last year, Kuwait and Saudi Arabia signed an agreement to develop the field, despite objections from Iran which branded the deal as "illegal". Mohsen KhojstehMehr, managing director of the National Iranian Oil Company, said last week that "there is full preparation to start drilling in the joint Arash oil field". "Considerable resources have been allocated to the board of directors of the National Iranian Oil Company for the implementation of the development plan for this field," he said in remarks carried by Iranian state media.
Iran and Kuwait have held unsuccessful talks for many years over their disputed maritime border area, which is rich in natural gas. Saudi Arabia is also a part of the dispute since it shares with Kuwait maritime gas and oil resources in the area. Iranian drilling of the field in 2001 spurred Kuwait and Saudi Arabia to agree on a maritime border deal which stipulated that they jointly develop the offshore zone. In March, Saudi Arabia and Iran announced a surprise Chinese-brokered rapprochement deal, agreeing to restore ties after a seven-year rift, raising hopes for reduced tensions between the Middle East heavyweights. - AFP
Source: Kuwait Times