With the third worst trading day for WTI crude oil in existence, Russia is feeling the pressure as oil and gas revenues fall, while struggling for its market share in key markets such as Europe and Asia.
Russian President Putin’s press spokesman Dmitri Peskov said on Wednesday that Russia would certainly welcome an improvement in oil prices, but that its country had not yet contacted OPEC to discuss measures.
Bloomberg quoted Peskov as saying: “Of course it is a low price, we would like to see it higher.” He added: “We are monitoring the situation on the global oil markets very closely, analyzing the situation and trying to make forecasts for the near and medium-term future “
Moscow’s decision not to deepen the production cuts triggered an unexpected reaction in Riyadh, which decided to leave the OPEC deal behind and pump it at full speed.
Saudi Arabia’s recent claim that it will supply the markets with 12.3 million bpd in the coming months triggered a further slump in oil prices on Wednesday afternoon. WTI slumped 25% after the Dow Jones Index lost more than 20,000 points and all gains since then effectively wiped out US President Trump.
In addition to Russia, OPEC producer Iraq No. 2 asked the cartel to come together and find a solution to stop the bloodbath in the oil markets. Iraqi oil minister Thamer al-Ghadhban has asked OPEC chief Mohammed Barkindo to call an extraordinary meeting of OPEC + to “discuss all possible ways” to reverse the fall in oil prices, according to Irina Slav from Oilprice.com.
At the moment, Saudi Arabia and the United Arab Emirates are unlikely to change course and listen to requests from Iraq, Venezuela, Mexico, and even the U.S. Senators. The oil war is unlikely to end soon, and as I mentioned yesterday, national prestige, honor and political power are driving this geopolitical game of thrones in which neither party wants to give an easy victory to the other.
Russia and all other producers are ready to face a lot more pain before sitting down at the negotiating table again.
By Tom Kool for Oilprice.com
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