EMEA News
Oil Markets Buoyed as Saudi Arabia and Russia Tighten Oil Ties
More news on the Russia/Organization of the Petroleum Exporting Countries (OPEC) reconciliation front came Thursday in the form of Saudi Arabia's King Salmon, who during the first ever visit by a Saudi monarch to Russia vowed to continue working with the former Soviet Union to stabilize the world oil market.
Salmon, who was met by president Vladimir Putin in the Kremlin, also said he was convinced there are opportunities to diversify economic cooperation with the Russians.
While nothing was formally declared, the notion that this meeting advanced chances of OPEC's cutback deal being extended through to the end of 2018 caused crude prices to jump 2 percent: West Texas Intermediate rose 81 cents to end at $50.79, while Brent settled up $1.20 to $57 per barrel.
Meanwhile, Khalid Al-Falih, energy minister for the Saudis, was also in Russia to attend Russia Energy Week 2017; he credited the partnership between the two countries as having "catalyzed cooperation of an unprecedented coalition of 24 countries (OPEC and non-OPEC); it has breathed back life into OPEC, which found itself, quite frankly, unable to swing its production as supply was persistently high in 2014 and global inventories were steadily rising ahead of demand."
As for prices, Al-Falih said they "are ultimately for the markets to determine based on marginal cost of productions and expectations of supply and demand.
"But as I think of fundamentals, I am more optimistic than I have been in the last two or three years: demand is healthy around the world in developed and developing countries."
Alexander Novak, energy minister for Russia, told media that the global glut (which he quantifies) as being in surplus to the tune of 340 million barrels in comparison with the five year average) has been halfed since end-2016 and $50 to $60 oil per barrel is now an "optimum" range - although he expressed reluctance to forecast prices.
Even though the fate of the OPEC cutback extension remains undecided, any rift between Russia and the Saudis seems to be in the past: KIing Salmon's visit to Moscow has reportedly resulted in the planned signing of joint investment deals worth over $3 billion, including a $1.1 billion agreement for Russian petrochemical firm Sibur to build a plant in Saudi Arabia.
Earlier this week, Putin signaled a potential shift in Russian policy by conceding that the cutbacks could indeed last throughout 2018: he said, "on the whole, if speaking about a possible extension, this should be at least until the end of 2018."
