Saudi Arabia has been leading the OPEC + countries in cutting down its production in crude, backed by Russia.
OPEC + countries have agreed to cut down their exports to bring stability to crude prices, which had been falling continuously. Russia and Saudi Arabia have led other countries in their crude production cuts.
When sanctions imposed on Iran’s crude oil were relaxed, another round of supply glut was expected in the market by the OPEC + countries. After a group discussion, Saudi Arabia and Russia agreed to cut down their production again.
According to data from the Joint Organization Data Initiative, export from Saudi has dropped from 7.687 million barrels per day in December to 7.254 million barrels per day in January. Exports have dropped from 8.2 million barrels per day in November to 6.9 million barrels per day this month.
The Energy Minister of Saudi Arabia, Khalid-al-Falih has said that all steps will be taken to cut production further if required. But Russia is quite hesitant about further cut in production.
Crude prices are not seeing a major increase despite production cuts to expected levels. This has caused a strain over the relationship between Russia and Saudi Arabia.
The Russian Energy Minister Alexander Novak has said that it is too soon to talk about further production cuts in April. The scheduled meeting that was to take place next month is canceled and is postponed to a later date.
Though there are signs of dissent between Russia and Saudi Arabia, the cancellation of this meeting is an open sign of disagreement.
Analyst Andrew Dodson from Philipp Oil says that Russia is showing its unwillingness for further cuts in oil production.
While Novak says that crude prices are acceptable currently by all parties, Al-Falih says that the rebalancing is not complete and inventories have to be cut further. The alliance seems to have trouble.