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Riyadh in the “keep cuts” campMENA

Riyadh in the “keep cuts” camp

Saudi Arabia and Russia were butting heads once again on the topic of oil output. Since the slump in the oil markets last year (COVID-19 restrictions absolutely crushed global demand), members of the Organization of the Petroleum Exporting Countries and its allies (aka OPEC+) have agreed to curb oil production to boost prices.

Oil markets have recently recovered after a very turbulent year, especially after the Arctic storm (that recently hit the US) froze about 40% of its production.

KSA is urging fellow members to be cautious despite the spike in prices. The country announced it would slash crude production in February and March, but (between us) it looks like it is willing to keep those measures for even longer.

Russia, on the other hand, appears to be more inclined to go ahead with increasing supply (a plan that OPEC+ had agreed on previously), since global demand is finally recovering now that vaccines are becoming mainstream.

why it matters
Saudi Arabia is the world’s largest oil exporter - so, by keeping the supply cuts, the Kingdom is playing a long-term game to push the prices up and bring economic stability to the region. Now, we must wait for their March 4th meeting to learn all the tea.