Saudis dispel rumors, saying no talks with Moscow on oil output

By Javier Blas on 3/27/2020

(Bloomberg) -- Saudi Arabia held firm on its position in the price war with Russia, saying on Friday that the kingdom hasn’t had any contacts with Moscow about oil production cuts or about enlarging the OPEC+ alliance.

The comments from the Saudi Energy Ministry dispelled speculation that Riyadh and Moscow may be seeking diplomatic talks. They came hours after the Russian deputy oil minister Pavel Sorokin said in Moscow that OPEC+ alone couldn’t rebalance the market and “many more countries should participate in rebalancing.”

The kingdom’s statement suggests that both Saudi Arabia and Russia are prepared for a long price war -- despite the howls of protest from other members of the Organization of Petroleum Exporting Countries. Their dispute threatens to turn the industry into a Darwinian survival of the fittest that could put both rivals and allies out of business, including U.S. shale oil producers.

“There have been no contacts between Saudi Arabia and Russia energy ministers over any increase in the number of OPEC+ countries, nor any discussion of a joint agreement to balance oil markets,” the Saudi Ministry of Energy said in the statement.

Brent crude dipped below $25 a barrel on Friday as the coronavirus pandemic threatens to wipe out a fifth of global oil demand. Crude prices have fallen more than 60% since the beginning of the year.

Despite a strong appeal by the American government to Saudi Arabia to end the price war, Riyadh has so far kept firm on its position.

Earlier this week, U.S. Secretary of State Michael Pompeo urged the kingdom to “rise to the occasion and reassure” energy markets at a time of economic uncertainty. He spoke with Saudi Crown Prince Mohammed bin Salman on the eve of a conference call between the leaders of the Group of 20 on the global pandemic. Yet the meeting ended on Thursday with a communique that made no reference to oil.

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