Saudi Arabia and Russia deny oil supply to attempt to increase prices

July 6, 2023: On Wednesday, the latest voluntary crude oil outcome round clips evidence of the cooperation between heavyweight producers and partners Russia and Saudi Arabia, the kingdom’s Energy Minister, Prince Abdulaziz bin Salman stated.

On Monday, Saudi Arabia declared that it would open the 1-million-barrel for everyday production slashed it had initially flagged for July into August, while Russia reported a 500,000 barrel for each day decline in exports in the coming month.

This adds to the just over 1.66 million barrels for each day of voluntary drops that some members of the Organization of the Petroleum which exports Countries and its partners stated that OPEC+ had first declared in April, then agreed to stretch until the end of 2024 during the coalition’s ministerial conference of June.

Unlike alliance-wide OPEC+ policy decisions, voluntary production declines do not require unanimous approval and need not be implemented by all group members.

Addressing the tardily Riyadh-Moscow reductions agreed for August at an OPEC+ seminar in Vienna Wednesday; Prince Abdulaziz said: “In the last move this week, yes, we are all continuing with our voluntary cut, but again, part of what we have had done with our colleagues from Russia was also to mitigate the cynical side of spectators about what was going on with Saudi Arabia and Russia.”

Some questions have surfaced over the capacity to which Russia will be honoring its voluntary crude production decline pledges, given ongoing opacity over its refinery consumption and seaborne exports, which are no longer accepted in Europe since December and have been rerouted to Asia. The Russian state news agency Tass, the Russian government has suspended publishing official statistics for oil, natural gas, and gas condensate production until April 2024.

Implementing a cut on exports rather than output will allow market participants who rely on independent third-party tracking data to verify the extent to which Russia stands by its commitments.

“It was a voluntary cut that was not imposed on them including delivering, that they will do it from their exports because it is more meaningful,” Abdulaziz said Wednesday.

The Saudi energy minister had stated that OPEC+ can “absolutely” trust Russia.

“But I always like President Reagan line, ‘Trust but verify,'” he said at the time, stressing the instrumental role of separate sources in assessing production. The OPEC+ group takes guidance from seven independent so-called secondary sources when investigating the compliance of individual country members with their output commitments.

An OPEC+ delegate, who could only utter on condition of anonymity because of the sensitive nature of the discussions, told that OPEC+ relations between Moscow and Riyadh appeared good.

Brent prices have so far remained slightly above the $75 per barrel threshold, drawing scant support from the voluntary decline announcements between a broader focus on demand and macroeconomic worries over a potential

international slump.