Riyadh and Moscow Propose to Freeze Oil Output

Riyadh and Moscow Propose to Freeze Oil Output

Oil ministers of Saudi Arabia and Russia, Ali Al-Naimi and Alexander Novak, held talks in Qatar on 16th February to discuss the oil market amid a push for cooperation between OPEC and other major producers to tackle a global surplus, Bloomberg wrote. Riyadh and Moscow agreed to freeze output to tackle a global glut but said the deal was contingent on other producers, yet with Iran absent from the meeting and planning to ramp up shipments, according to Reuters.

The Saudi minister said that freezing production at January levels was an adequate measure and new steps to stabilize the market could be considered in the next few months. He expressed hopes that other oil producing countries would also adopt the proposal. Further talks are expected to be held with Iraq and Iran in February. Any hope of sealing a global deal has foundered on Iran’s position, Reuters informed in a related report, as Tehran insists on raising crude supply in attempts to reinstate the country in the global oil market. In addition, Russian Foreign Ministry emphasized that Moscow seeks improved relations between Iran and Saudi Arabia at a time when joint action is needed, informed Business Insider.

Riyadh had previously insisted that it would not reduce oil production to boost global oil prices without cooperation from non-OPEC countries. Moscow had agreed to amend its production volumes, but only under the condition that there will be global coordination of efforts. While Venezuela has been the hardest-hit major producer, oil below $30 is a fraction of what Russia needs to balance its budget as it heads towards parliamentary elections this year. Saudi finances are also suffering badly, running a $98b budget deficit last year, which it seeks to trim in 2016.

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