Russia and Saudi Arabia look set to extend their pact to keep oil prices higher by withholding 1% of world demand from the market, Vladimir Putin has indicated.
The Russian president announced on Wednesday that the cuts to oil supplies imposed by Saudi Arabia and Russia would “most likely” continue despite market concerns that the conflict between Israel and Hamas could drive crude prices to $100 a barrel.
Higher global oil prices would provide a windfall for Russia, which has seen sales of gas to Europe plummet after its invasion of Ukraine last year. The rise in crude prices is also expected to frustrate western leaders struggling to contain inflation.
Putin told an industry conference in Moscow that Russia’s deal with Saudi Arabia to hold back oil supplies was “important for the predictability of the oil market, and ultimately for the wellbeing of all mankind.”
The world’s top two oil exporters met in Moscow on Wednesday to discuss the global market after the surprise attack by Hamas fighters on Israeli civilians over the weekend.
Russia’s deputy prime minister, Alexander Novak, the Kremlin’s top oil official, and the Saudi energy minister, Prince Abdulaziz bin Salman, met in Moscow in advance of Russia’s energy week conference.
Hamas’s surprise attack last weekend ignited a surge in the global benchmark oil price, which rose by almost $4 a barrel, or more than 4%, to $88 as traders speculated that a wider escalation of the conflict across the Middle East could disrupt supplies.
Magid Shenouda, the deputy CEO of the commodity trading giant Mercuria, told an industry conference in the United Arab Emirates on Wednesday that the oil price could reach $100 a barrel if the situation in the Middle East escalated.
“I don’t think there are that many analysts that believed that it was going to go to $100 in a normal circumstance. I think the events that have happened recently put a great cloud [over] where things could go,” Shenouda said.
Crude prices rose to $90 a barrel last month after the world’s leading producers announced they would extend their coordinated production cuts until December to shore up prices.
Saudi Arabia and Russia agreed to withhold a combined 1.3m barrels a day, or more than 1% of global demand, from the market until the end of the year, frustrating world leaders struggling against inflation.
Putin said: “The actions of some of our colleagues, the western elites, have sown confusion on the global energy market, including on the oil market, the negative consequences of such politicised steps affect the entire global economy, now it has to be corrected, and, of course, responsible market participants have to do it.”
Saudi Arabia said on Tuesday it was working with regional and international partners to prevent an escalation of the situation in Gaza and Israel, and reaffirmed that it supported efforts to stabilise oil markets.
