Saudi Arabia stands by Russia in Opec+ despite oil sanctions

Prince Abdulaziz bin Salman, the energy minister, told the Financial Times that Riyadh was hoping “to work out an agreement with Opec+ . . . which includes Russia”, insisting the “world should appreciate the value” of the alliance of producers. His comments are an important sign of support for Russia from a traditional US ally as the west tries to isolate the country and its oil production falls, raising questions about its place in the Opec+ group. As energy consumers grapple with oil prices that are at their highest levels in a decade, a set of Opec+ production quotas put in place in April 2020 is due to expire in three months. Riyadh has been resisting western pressure to raise crude output to help bring down prices in the wake of Russia’s invasion of Ukraine, insisting there is not a lack of supply. Prince Abdulaziz said it was too early to say what a new agreement might look like, but added that Opec+ would increase production “if the demand is there”. “With the havoc you see now it’s too premature to try to pinpoint [an agreement],” he said. “What we have succeeded to deliver is sufficient for people to say so far there is a merit, there is a value of . . . working together.” Opec+ has stuck to its 2020 agreement under which the alliance members raise total production each month by the modest amount of 430,000 barrels a day. But Russia’s output has dropped since the start of the Ukraine war from about 11mn barrels a day in March to an average of 10mn b/d in April, according to data provider OilX. The International Energy Agency predicts it could fall further, declining by as many as 3mn b/d if western powers impose tougher sanctions to reduce Europe’s dependence on Russian energy, including a possible EU ban on oil imports. Saudi Arabia, the de facto leader of Opec and the world’s top oil exporter, has co-ordinated production quotas with Russia through Opec+ since 2016. The kingdom has sought to navigate a neutral path since Russia invaded Ukraine. Crown Prince Mohammed bin Salman has spoken twice to Vladimir Putin since the invasion and he and King Salman congratulated the Russian leader on the day the country marked the Soviet victory over Nazi Germany. Prince Abdulaziz blamed soaring prices on a lack of global refining capacity and taxes. He said the alliance would be needed to bring about “orderly adjustments” in the future amid uncertainty about coronavirus lockdowns in China, global growth and supply chains. Some members of Opec+ have also consistently failed to meet their production quotas, and Saudi Arabia and the United Arab Emirates are the only producers who have the capacity to significantly increase output.