Russia and Saudi Arabia oil deal
Posted: Thu Jan 28, 2016 7:05 pm
This is from a not I just got from RBC Capital Markets 1-28
Headlines are mounting that OPEC and Russia could agree to collectively pull barrels from the
market in an effort to bolster prices. While we believe that it is too soon to say whether a policy
change will actually materialize, we have seen some signs of softening in the Russian position this
week that suggest that the economic realities of low prices are prompting a consideration of an
exit ramp. The Russian Energy Minister is reported to have said that Saudi Arabia has floated an
offer for a 5% cut and that Moscow would engage in discussion, despite that “there are lots of
questions about the oversight over cuts.” Earlier this week, the Vice President of Russia’s Lukoil
stated that he would be amenable to restricting supply in cooperation with OPEC, stating that he
would rather sell “one barrel of oil at $50 than two at $30” (TASS, January 25, 2016). This marked
the first time since the price decline that one of Russia’s major producers has signaled a
willingness to cooperate with OPEC so publicly.
Headlines are mounting that OPEC and Russia could agree to collectively pull barrels from the
market in an effort to bolster prices. While we believe that it is too soon to say whether a policy
change will actually materialize, we have seen some signs of softening in the Russian position this
week that suggest that the economic realities of low prices are prompting a consideration of an
exit ramp. The Russian Energy Minister is reported to have said that Saudi Arabia has floated an
offer for a 5% cut and that Moscow would engage in discussion, despite that “there are lots of
questions about the oversight over cuts.” Earlier this week, the Vice President of Russia’s Lukoil
stated that he would be amenable to restricting supply in cooperation with OPEC, stating that he
would rather sell “one barrel of oil at $50 than two at $30” (TASS, January 25, 2016). This marked
the first time since the price decline that one of Russia’s major producers has signaled a
willingness to cooperate with OPEC so publicly.