Bloomberg has reported that Russian Energy Minister Alexander Novak and his Saudi equivalent Prince Abdulaziz bin Salman spoke in a recent video conferencing meeting about maintaining the current production cuts. While they both welcomed a resurgence in oil demand and a recovery in oil prices, they stressed the importance of not easing output restrictions at this time.
The oil markets have recovered recently in part thanks to the OPEC+ cuts. While they are not obliged to follow suit, many US oil producers, like ExxonMobil, the oil major that produces the Mobil range of grease products, have also pared back production in response to poor market conditions.
The potential risk of a lengthy second wave of coronavirus infections was cited as a particular concern that may slow recovery, according to the meeting’s draft communique. Both Russia and Saudi Arabia were therefore keen to highlight that the organisation should not grow complacent and should fully implement any remaining curbs.
Prior to the meeting, BNP Paribas SA’s Head of Commodity Markets Strategy in London, Harry Tchilinguirian, said to Bloomberg:
“The Saudis have certainly been holding a consistent and firm position when it comes to compliance. Given that the oil demand recovery is still very uncertain, they understand the importance of delivering the pledged output reductions for the global oil balance.”
Iraq has made progress recently in implementing its cuts. It also plans to cut an additional 400,000 barrels a day in the coming months to compensate for its previous shortfall in compliance.