Saudi Arabia says no talks with Russia

Saudi Arabia said today that it is not talking with Russia about reducing oil output, just days ahead of the expiry of the Opec+ agreement. From next month, countries party to that pact will be free to supply without restraint, into a market that is showing signs of saturation as demand plummets.

"There have been no contacts between Saudi Arabia and Russia energy ministers over any increase in the number of Opec+ countries, nor any discussion of a joint agreement to balance the oil markets," Saudi state-run news agency SPA quoted an oil ministry spokesman as saying.

It is unclear if communications have been made at levels lower than ministerial.

Earlier Russia's deputy energy minister Pavel Sorokin said Opec+ countries have remained in contact, and called for "as many countries as possible" to join Opec+ in rebalancing the market. The Opec and non-Opec Joint Technical Committee (JTC), which advised the Opec+ group on output policy, did not meet this month, after the restraint agreement collapsed at a series of meetings in Vienna on 5-6 March.

Saudi Arabia, Russia and others have since engaged in a battle for market share, just as the coronavirus pandemic has crushed demand for refined products. IEA director Fatih Birol said yesterday that demand is in "free-fall". The price of crude has halved since the Vienna meetings concluded.

Saudi Arabia has said it will supply its customers with 12.3mn b/d of crude in April and May — some 300,000 b/d above its maximum sustainable capacity — and it has begun heavily discounting its official formula selling prices. Russia could add 200,000-300,000 b/d within a month, and has the potential for up to 500,000 b/d of additional supply in the longer term, oil minister Alexander Novak said earlier this month, although the scale of the demand drop moved Russian firm Tatneft to say this week that increasing output may not be "economically expedient".

Front-month Ice Brent crude futures traded at 24.46/bl as of 15:49 GMT, down by 7pc on the day and less than half the level at the start of the month when Opec+ met in Vienna.

By Samira Kawar and Anastasia Krasinskaya