Saudi Arabia and Russia signalled on Thursday they were ready to cooperate to help stabilise the oil market after calls with U.S. President Donald Trump to discuss the slump in prices triggered by the end of a deal to curb output and a collapse in demand.
After the deal collapsed, Russia and Saudi Arabia both said they were ready to raise production but Russian Energy Minister Alexander Novak told Reuters on Thursday it had no plans to crank up its crude output.
A senior Gulf source familiar with Saudi thinking, meanwhile, told Reuters on Thursday that Saudi Arabia supported cooperation between oil producers to stabilise the market but it was Russia’s opposition to a proposal last month to deepen oil supply cuts that caused the market turmoil.
Oil prices LCOc1 have halved to under $26 a barrel since Saudi Arabia, de facto leader of OPEC, and other producers led by Russia - collectively known as OPEC+ - failed to agree a joint supply response to the slump in fuel demand caused by the coronavirus pandemic.
U.S. President Donald Trump said on Wednesday he had talked with Saudi and Russian leaders and believed the two countries would make a deal to end their price war within a few days, lowering output and bringing prices back up.
Oil prices jumped 10% on Thursday after Trump’s comments.
Stabilising the oil market through output cuts is likely to be tough in the current environment because oil demand has fallen by almost a third, or at least 20 million barrels per day, meaning significant reductions would be required.
Russian President Vladimir Putin called on Wednesday for global oil producers and consumers to address “challenging” oil markets and the senior Gulf source said Saudi Arabia wanted producers to work together.
“Saudi Arabia has always welcomed and supported cooperation among oil producers in their efforts to stabilize the oil market during the current crisis, based on the principles of fairness and equity,” the Gulf source told Reuters.
The U.S. Energy Department on Wednesday urged Saudi Arabia and Russia to calm oil markets after the kingdom’s crude supply hit a record even as demand falters because of coronavirus.
Novak told Reuters that Russia had not yet discussed the oil market situation with Saudi Arabia but did not rule this out.