“Saudi Arabia and Russia agreed to freeze oil output at near-record levels, the first coordinated move by the world’s two largest producers to counter a slump that has pummeled economies, markets and companies,” Bloomberg reports.
- is preliminary,
- doesn’t include Iran,
- includes Qatar and Venezuela,
- is to fix production at January levels.
Saudi Arabia said it’s open to further action.
According to the news agency, oil pared gains after the accord was announced, signaling traders see no immediate end to the global supply glut.
The reason we agreed to a potential freeze of production is simply the beginning of a process (over next few months) (…)
We don’t want significant gyrations in prices. We don’t want a reduction in supply. We want to meet demand. We want a stable oil price.
said Saudi Oil Minister Ali Al-Naimi said in Doha Tuesday after the talks with Russian Energy Minster Alexander Novak.
According to Bloomberg:
Russia supplied more oil to China than Saudi Arabia did in four months of 2015. At the start of 2011, Russian producers had as little as 3.7 percent of the Chinese market against a 19 percent share for their Saudi rivals. Since then, Transneft has completed its ESPO pipeline to bring Siberian oil to the port of Kozmino on the Sea of Japan east of Vladivostok. In December, it had a 14 percent share, ahead of Saudi Arabia’s 13 percent by some 2.9 million barrels.
Last Sunday, Emerging Equity, published a short piece which refers to five reasons why to buy oil now.