OPEC+: Closer cooperation between Saudi Arabia and Russia

Saudi Arabia and Russia reaffirm their commitment to the OPEC+ agreement to stabilize the oil market, despite geopolitical challenges and Western sanctions.

Share:

Coopération renforcée OPEC+ Arabie-Russie

Saudi Arabia and Russia, two of the world’s largest oil producers, reiterated their commitment to maintaining close coordination within OPEC+ to ensure energy market stability. In a phone call, Saudi Crown Prince Mohammed bin Salman and Russian President Vladimir Putin stressed the importance of this strategic alliance. This cooperation aims to maintain the production cuts needed to balance the market and support oil prices.
Since the start of the year, the 22-member OPEC+ has implemented production cuts of 5.86 million barrels per day (b/d). These measures have contributed to a rise in prices, although they remain below the levels needed to balance the budgets of many members. On August 1, the OPEC+ Joint Ministerial Monitoring Committee will meet to assess market conditions and make recommendations on production policy.

Geopolitical challenges and sanctions

The relationship between Saudi Arabia and Russia is particularly significant in the context of Russia’s invasion of Ukraine. This situation has considerably altered world oil flows and subjected Moscow to severe sanctions from Western countries. Despite these challenges, Russia continued to produce oil, often exceeding the quotas set by OPEC+.
In June, Russian production reached 9.10 million b/d, its lowest level since December 2020, but still above its quota. This situation obliges Russia to make “compensatory reductions” to comply with the OPEC+ agreements. The Russian Ministry of Energy has indicated that technical reasons make it easier to reduce production during the summer months.

Impact on exports and prices

Russia’s crude oil exports fell to 2.9 million b/d in the first half of July, the lowest level since December 2022. This drop is due to the return to service of refineries damaged by Ukrainian drone attacks and the new European Union (EU) sanctions against Russia. The reduction in exports could also be attributed to Russia’s commitments to comply with OPEC+ production agreements.
Despite these efforts, oil prices remain volatile. Dated Brent was valued at $86.20/b on July 17, up 13.5% on the 2024 low, but still below the levels needed for many OPEC+ members. OPEC+ production cuts have certainly tightened the market, but compliance problems persist, particularly for countries such as Iraq and Kazakhstan, which are also exceeding their quotas.

Future prospects and challenges

Cooperation between Saudi Arabia and Russia within OPEC+ remains crucial to the future of the global oil market. As the West continues to exert pressure on Russia through sanctions, the dynamics within OPEC+ could be decisive for oil price stability. The assessment of the market situation at the next OPEC+ meeting will be crucial in determining the alliance’s future strategy.
OPEC+’s ability to maintain strict production discipline and navigate a complex geopolitical context will be key to ensuring the stability of the global energy market. The ongoing interactions between Riyadh and Moscow and their commitment to OPEC+ illustrate the complexity and importance of strategic alliances in the energy sector.

The private OCP pipeline has resumed operations in Ecuador following an interruption caused by heavy rains, while the main SOTE pipeline remains shut down, continuing to impact oil exports from the South American country.
McDermott secures contract worth up to $50 million with BRAVA Energia to install subsea equipment on the Papa-Terra and Atlanta oil fields off the Brazilian coast.
Saudi Aramco increases its oil prices for Asia beyond initial expectations, reflecting strategic adjustments related to OPEC+ production and regional geopolitical uncertainties, with potential implications for Asian markets.
A bulk carrier operated by a Greek company sailing under a Liberian flag suffered a coordinated attack involving small arms and explosive drones, prompting an Israeli military response against Yemen's Houthis.
The Canadian government is now awaiting a concrete private-sector proposal to develop a new oil pipeline connecting Alberta to the Pacific coast, following recent legislation intended to expedite energy projects.
Petrobras is exploring various strategies for its Polo Bahia oil hub, including potentially selling it, as current profitability is challenged by oil prices around $65 per barrel.
Brazilian producer Azevedo & Travassos will issue new shares to buy Petro-Victory and its forty-nine concessions, consolidating its onshore presence while taking on net debt of about USD39.5mn.
Major oil producers accelerate their return to the market, raising their August quotas more sharply than initially expected, prompting questions about future market balances.
Lindsey refinery could halt operations within three weeks due to limited crude oil reserves, according to a recent analysis by energy consultancy Wood Mackenzie, highlighting an immediate slowdown in production.
The flow of crude between the Hamada field and the Zawiya refinery has resumed after emergency repairs, illustrating the mounting pressure on Libya’s ageing pipeline network that threatens the stability of domestic supply.
Libreville is intensifying the promotion of deep-water blocks, still seventy-two % unexplored, to offset the two hundred thousand barrels-per-day production drop recorded last year, according to GlobalData.
The African Export-Import Bank extends the Nigerian oil company’s facility, providing room to accelerate drilling and modernisation by 2029 as international lenders scale back hydrocarbon exposure.
Petronas begins a three-well exploratory drilling campaign offshore Suriname, deploying a Noble rig after securing an environmental permit and closely collaborating with state-owned company Staatsolie.
Swiss commodities trader Glencore has initiated discussions with the British government regarding its supply contract with the Lindsey refinery, placed under insolvency this week, threatening hundreds of jobs and the UK's energy security.
Facing an under-equipped downstream sector, Mauritania partners with Sonatrach to create a joint venture aiming to structure petroleum products distribution and reduce import dependency, without yet disclosing specific investments.
Dalinar Energy, a subsidiary of Gold Reserve, receives official recommendation from a US court to acquire PDV Holdings, the parent company of refiner Citgo Petroleum, with a $7.38bn bid, despite a higher competing offer from Vitol.
Oil companies may reduce their exploration and production budgets in 2025, driven by geopolitical tensions and financial caution, according to a new report by U.S. banking group JP Morgan.
Commercial oil inventories in the United States rose unexpectedly last week, mainly driven by a sharp decline in exports and a significant increase in imports, according to the US Energy Information Administration.
TotalEnergies acquires a 25% stake in Block 53 offshore Suriname, joining APA and Petronas after an agreement with Moeve, thereby consolidating its expansion strategy in the region.
British company Prax Group has filed for insolvency, putting hundreds of jobs at its Lindsey oil site at risk, according to Sky News.