Oil is trading above $35 dollars Thursday the talks between the world’s largest oil producers over unprecedented production cuts go down to the wire with Riyadh and Moscow continuing to disagree over key details just hours before a virtual meeting of OPEC+.
Saudi Arabia was pushing for any supply curbs to be measured against a higher baseline — its April production of above 12 million barrels a day, delegates said. At the same time, Russia showed no sign of weakening its insistence that a deal was only possible if the U.S. cuts output too.
Oil erased most of its gains after the Kremlin said Putin has no plans to talk directly to President Donald Trump or the Saudi rulers on Thursday to facilitate a deal.
Moscow, whose grudge against U.S. shale is arguably the biggest obstacle for a deal, said Wednesday it’s willing to reduce output by 1.6 million barrels a day, or roughly 15%. Saudi Arabia was also discussing a cut of 15% to 17% on Thursday, delegates said, asking not to be identified because the talks were private.
However, the two sides were still disagreeing over the baseline for those reductions, the delegates said. It’s a debate that could make a huge difference to the size of the production cut.
As the Saudis have pushed for their contribution to be measured against current record output, Russia has favored using an average of the first quarter, when the kingdom pumped about 9.8 million barrels a day.
At stake is the fate of entire oil-dependent economies, thousands of companies and millions of oil industry jobs as the OPEC+ coalition and Group of 20 energy ministers gather in two key video conferences this week.
Crude futures have plunged to the lowest levels in almost two decades as the lockdowns around the world slash oil demand by as much as 70% in some places and Russia and Saudi Arabia battle for their share of a shrinking market.
With Trump pressing hard for a deal, and the whole Group of 20 involved too, a lot is riding on this week’s negotiations. OPEC+ convened a conference at 4 p.m. Vienna time on Thursday, by video link. Saudi Arabia will lead a virtual conference of G-20 energy ministers the following day at 3 p.m. Riyadh time.
So far, the Kremlin has insisted the U.S. should do more than just let market forces reduce its record production. President Donald Trump, meanwhile, has put huge diplomatic pressure on Russia and Saudi Arabia, while saying America’s cut will happen “automatically” as low prices put America’s shale patch in dire straits.
“I think they’ll straighten it out — a lot of progress has been made over the past week,” Trump said at a White House briefing Wednesday. “We have a tremendously powerful energy industry in this country now, number one in the world, and I don’t want those jobs being lost.”