Russia and Saudi Arabia ready to curb oil production

A price war in the oil sector could force the most powerful opponents to abandon the fight for the global market. Russia and Saudi Arabia announced their readiness to curb the pace of funding. Prices for petroleum products rose significantly after the announcement of plans.

Presumably, Saudi Arabia intends to cut oil production due to falling prices. Accordingly, producing countries should cut their oil output by up to five percent, Energy Minister Alexander Novak said on Thursday. It will also provide an opportunity to organize a meeting of OPEC members and other producing countries. Russia is ready to do this. Oil rose in price following the announcement of these plans. The price for a barrel of North Sea Brent rose by eight percent to almost $ 36 and reached a three-week high that day. In the afternoon, the price dropped again, but to about $ 34.

Recently, oil prices have been falling massively due to high production levels and a lack of demand due to the global economic crisis. The general limit of five percent is currently under discussion, Novak said. “It's too early to talk about it,” said the minister in St. Petersburg. "There are still many questions in connection with the reduction control."

Saudi Arabia was initially opposed to the proposal, but an OPEC spokesman from the Persian Gulf said: "The OPEC countries are ready for any cooperation to stabilize the international oil market."

Recently, oil prices have dropped to a twelve-year low of about $ 27 a barrel. Nevertheless, about 18 months ago, 159 liters of this raw material cost $ 115. The situation is critical, especially for countries with developing economies and oil producers: For example, the IMF and the World Bank are already trying to save Azerbaijan from bankruptcy.

For oil exporting countries such as Saudi Arabia and Russia in particular, oil revenues represent an important source of funding for the state budget. In addition, low oil prices can lead to bankruptcies and loan defaults in the oil industry.