Riyadh rejects Russian claims it caused Opec+ collapse

Saudi Arabia today rebuked Russia for suggesting it was to blame for the collapse of the Opec+ output restraint deal last month, but held out hope that a new agreement to rebalance the oil market can be reached when the group meets online with other producing countries next week.

In a statement released on the Saudi state-run Spa news agency overnight, oil minister Prince Abdulaziz bin Salman denied comments from his Russian counterpart Alexander Novak yesterday, in which he claimed Saudi Arabia had refused an extension of the Opec+ agreement and had taken "other steps that negatively affected the oil market".

Russian president Vladimir Putin also weighed in, saying yesterday that the Saudi withdrawal from the Opec+ deal, coupled with its plan to increase production and its readiness to cut official formula prices for its crude, had contributed heavily to the recent collapse in oil prices.

Prince Abdulaziz has described the Russian statements as "categorically untrue". Saudi Arabia had "exerted strong efforts with Opec+ countries to reduce the surplus on the oil market resulting from the fall in global economic growth", he said. "However, the proposal made by the kingdom and accepted by 22 countries was, most regrettably, not acceptable to the Russian side, resulting in no agreement being reached," he said.

At meetings in Vienna last month, the 23-country Opec+ coalition considered a proposal to cut collective production by an additional 1.5mn b/d until the end of the year. Russia was the main dissenter, saying it preferred to extend existing output quotas for another three months until the end of the second quarter. That agreement has since expired.

Prince Abdulaziz went as far as blaming Russia for Riyadh's decision to boost its output. He said Novak had been the first to announce upon leaving the Opec+ meetings in March that all participating countries would no longer be bound by the agreement as of the beginning of April. This "led to the decision by countries to raise their production to offset the fall in prices and compensate for the loss of earnings", he said.

Prince Abdulaziz also denied that Riyadh is seeking the demise of US shale producers, saying that this is a goal for Russian oil companies, not Saudi Arabia.

"The Russian statements, in this regard, particularly those made by their chief executives, are well-known and clear for all," he said. "It is no secret that the kingdom is one of the major investors in the US energy sector."

Despite the sharp tone of his statement, the Saudi oil minister appeared to hold out hope of an agreement when Opec+ and other — as-yet unnamed — producers take part in a video conference scheduled for 6 April. But he made it clear that the meeting was called in response to a request by US president Donald Trump.

"The kingdom's arms remain open to those who want to find a solution for oil markets, and has called for an urgent meeting of Opec+ and a group of other countries as part of its continuous effort to support the global economy during these exceptional circumstances, and in response to the wish of ... President Trump to seek market balance," Prince Abdulaziz said.

Trump said last week that he expects and "hopes" that Saudi Arabia and Russia will agree to cut oil output by 10mn-15mn "barrels" — widely assumed to be barrels a day. But several Opec+ delegates have told Argus that the US would likely need to contribute to the cuts as part of any new agreement.

Saudi Arabia's foreign minister Prince Faisal bin Farhan echoed the oil minister's comments in a separate statement, saying he hopes "Russia will take the correct decisions at the Opec+ meeting ... with the aim of arriving at a fair agreement that restores the desired balance to oil markets so that they are not endangered again".

By Samira Kawar