UPDATE4: Russian, Saudi energy min sign statement to stabilize oil market

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HANGZHOU, China, Sep 5 (PRIME) -- Russia and Saudi Arabia have agreed to take joint steps or to cooperate with other oil producers to ensure stability on the oil market, according to the text of a statement signed by Russian Energy Minister Alexander Novak and Saudi Energy Minister Khalid Al-Falih on Monday.

Oil suppliers have faced serious long-term challenges, such as lower capital expenditures on oil exploration and development, and postponement of a large number of investment projects making the oil market situation very unstable.

“Taking into account the aforementioned, the ministers have emphasized particular importance of constructive dialogue and close cooperation between the major producing countries in order to maintain stability on the oil market and a sustainable level of investment in the long term. In this regard, the ministers agreed to act jointly or in cooperation with other oil producers.”

Oil prices soared by almost 4% after the statement to U.S. $48.67 per barrel.

Russia and Saudi Arabia have recognized that an oil output freeze is the most efficient way to stabilize the oil market in the current situation, Novak told reporters later in the day. The countries are studying a possibility to freeze oil output for three months and a longer period, Novak said.

“From three to six months, and maybe a longer period,” he said.

Russia is ready to join a decision on an oil output freeze at the level of any month of the second half of this year, Novak also said.

Oil output freeze terms and criteria will be discussed during an international energy forum in Algeria in September, he also said.

Iran can join the oil output freeze once it reached a pre-sanctions level, Novak also said.

The two ministers agreed to hold the first meeting of a Russian–Saudi working group to coordinate joint oil and gas steps in October.

Novak told reporters: “We are in fact, opening a new era of our cooperation today, our energy cooperation has transformed into a deeper and tighter interaction, into a strategic partnership. This has become possible because of confident relations with our Arabic friends.”

The minister said that an oil market rebalancing has taken more than two years and an output freeze could accelerate market stabilization significantly. “We are ready to join if there is a decision of such kind (on oil output level suspension).”

Russia has a coordinating role in international efforts to stabilize oil prices, permanent representative in international organizations in Vienna Vladimir Voronkov said.

“The signing of this agreement itself is a step forward, the sides undertake to fulfill concrete liabilities,” Voronkov said.

Novak said that Russia’s position is to give Iran, the main detractor of an oil output freeze proposal, a possibility to reach the pre-sanctions output level.

Bahrain will support the decision to freeze oil output if Russia and Saudi Arabia reach an agreement, ambassador Ahmed Al Saati said. “We will fully support any decision made in coordination between Russia and Saudi Arabia.”

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