Humbled Saudis May Yet Clinch OPEC+ Deal as Virus Crisis Worsens - Bloomberg:
Saudi Arabia has so far been thwarted by Russia in its push to shore up oil markets against the coronavirus. But when they meet next week, the humbled kingdom may yet clinch victory.
Ever since it became clear the outbreak was savaging energy demand in China -- and oil prices everywhere -- Riyadh has been pushing for swift production cuts to compensate. Russia, the most important partner in the producers’ coalition, rebuffed those entreaties, underscoring the dominant role that President Vladimir Putin has played since forging an alliance with the Saudis three years ago.
“They’re sitting in very different places -- clearly, Putin has an advantage,” said Ed Morse, head of commodities research at Citigroup Inc. “The fact is that Russia has a budget that can be balanced at less than $50 a barrel, and the Saudis don’t.”
That gives Moscow the upper hand when the countries sit down to debate a joint policy on March 5 to 6. But while slumping prices put the kingdom and its energy minister under tremendous pressure, growing signs that the virus imperils the global economy may ultimately work in Riyadh’s favor.
Saudi Arabia has so far been thwarted by Russia in its push to shore up oil markets against the coronavirus. But when they meet next week, the humbled kingdom may yet clinch victory.
Ever since it became clear the outbreak was savaging energy demand in China -- and oil prices everywhere -- Riyadh has been pushing for swift production cuts to compensate. Russia, the most important partner in the producers’ coalition, rebuffed those entreaties, underscoring the dominant role that President Vladimir Putin has played since forging an alliance with the Saudis three years ago.
“They’re sitting in very different places -- clearly, Putin has an advantage,” said Ed Morse, head of commodities research at Citigroup Inc. “The fact is that Russia has a budget that can be balanced at less than $50 a barrel, and the Saudis don’t.”
That gives Moscow the upper hand when the countries sit down to debate a joint policy on March 5 to 6. But while slumping prices put the kingdom and its energy minister under tremendous pressure, growing signs that the virus imperils the global economy may ultimately work in Riyadh’s favor.
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