Tensions are rising between Saudi Arabia and Russia, as Russia continues to pump huge volumes of cheaper crude oil into the market and undermine Saudi efforts to raise prices, The Wall Street Journal reported Saturday.
Saudi Arabia reportedly expressed his anger at Russia for failing to deliver on its previous pledge to cut production in response to Western sanctions, ahead of a crucial OPEC+ meeting scheduled in Vienna on June 4.
Earlier this week, Saudi Arabia’s energy minister issued a warning to oil speculators, signaling to the market that further production cuts were possible, but Russia’s deputy prime minister quickly contradicted him, expressing doubts on further reductions.
In early April, Saudi Arabia, Russia and other OPEC+ members announced they would cut production, which should support oil prices; Saudi Arabia began cutting production this month, but the latest available data shows Russia is continuing to pump large volumes of oil into the market, adding to a global surplus and weighing on prices.
Crude oil futures are around 10% lower than early April despite Saudi-led production cuts, with Brent crude closing Friday at $76.95/bbl.
Saudi Crown Prince Mohammed bin Salman, the de facto Saudi ruler, has launched an ambitious plan to use his oil revenue stream to transform the kingdom’s economy, and is seen as under pressure to keep oil prices higher with its budget requiring around $81/bbl to pay for massive development projects at home.
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After OPEC+ unveiled its surprise production cuts, Goldman Sachs raised its year-end Brent price forecast to $95/bbl and its forecast for next year to $100/bbl; this week, Goldman reiterated its bullish call on crude oil and other commodities.
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