Saudi Arabia approaches Russia about oil output cuts, report claims

digitallook.com ^ | 27 Jan, 2016 17:42 - Updated: 19:48 | Alexander Bueso

[Trumpinator]

Saudi Arabia approaches Russia about oil output cuts, report claims

Alexander Bueso | Sharecast | 27 Jan, 2016 17:42 - Updated: 19:48

Saudi Arabia approached the Russian Federation about possible oil output cuts within the framework of the Organisation for Petroleum Exporting Countries, Transneft chief Nikolai Tokarev said on Wednesday, according to a report from TASS.

"Saudi Arabia came forward with the initiative to have a discussion that would include the members of OPEC," Tokarev said following a meeting between oil company executives and the Ministry of Energy.

"In particular, we talked about oil prices, the measures everyone should take, what is going to change the situation for the better, including the negotiations in the framework of OPEC in general and bilateral options as well. The initiative came from Saudi Arabia, they are the main negotiators."

According to Interfax, Tokarev also said Russia would participate at an OPEC summit which might be held in February.

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[Trumpinator]

I guess we know who blinked first in the oil war Saudi Arabia started. So anyone want to hazard a guess as to what the new barrel of oil price will be?

[SampleMan]

Putin might prefer a serious Iran-Saudi war that would close down Gulf production and leave Russia to pick up market share at a higher price.

[Trumpinator]

Putin might prefer a serious Iran-Saudi war that would close down Gulf production and leave Russia to pick up market share at a higher price.

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I thought of that too - but what if Saudis figured that out and want to make sure Russia does not unleash the Iranians on them?

[SampleMan]

A serious Iran-Saudi war would shut off most of the outflow from Iran, Saudi Arabia, Iraq, Qatar, and Kuwait.

The Saudis have a pipeline to the Red Sea, but defending it from infiltrators using light aircraft could be a real trick.

Demand is low and likely to go lower, due to world recession. Oil states are in such a hurt locker right now, that even doubling the current prices won't be enough, and that could take years given weak demand and stockpiled oil.

A war shutting out most of middle east might just do the trick, but it would have to be serious enough to close the SOH for an extended period and/or destroy oil production wells/facilities.

[Trumpinator]

This war is already being fought in Syria if you want to look at it that way.

[SampleMan]

This war is already being fought in Syria if you want to look at it that way.

Proxy war, but that doesn't have the required effects.

[Trumpinator]

Scary times, bro.

[thackney]

The Saudis have a pipeline to the Red Sea, but defending it from infiltrators using light aircraft could be a real trick.

It is also significantly smaller than their current exports.

Saudi Arabia has the 746-mile Petroline, also known as the East-West Pipeline, which runs across Saudi Arabia from its Abqaiq complex to the Red Sea. The Petroline system consists of two pipelines with a total nameplate (installed) capacity of about 4.8 million bbl/d. The 56-inch pipeline has a nameplate capacity of 3 million bbl/d, and its current throughput is about 2 million bbl/d. The 48-inch pipeline had been operating in recent years as a natural gas pipeline, but Saudi Arabia converted it back to an oil pipeline. The switch increased Saudi Arabia's spare oil pipeline capacity to bypass the Strait of Hormuz from 1 million bbl/d to 2.8 million bbl/d, but this is only achievable if the system operates at its full nameplate capacity.

[thackney]

Related report:

Russia wants to talk to OPEC about output cuts to bolster oil price
http://www.cnbc.com/2016/01/27/russia-wants-to-talk-to-opec-about-output-cuts-to-bolster-oil-price.html

Russian officials have decided they should talk to Saudi Arabia and other OPEC countries about output cuts to bolster oil prices, the head of Russia’s pipeline monopoly said on Wednesday, remarks that helped spur a sharp rise in world prices.

Oil futures surged more than 5 percent after the comments by Nikolai Tokarev, head of oil pipeline monopoly Transneft, which gave the strongest hint yet of possible cooperation between the top non-OPEC oil producer and the cartel to try to reverse a record glut.

Brent crude rose by over $2 to $32.95 a barrel, after a session low of $30.83. It was also boosted by U.S. demand following a blizzard.

But there was still a long journey from starting discussions to actual cuts by Russian oil producers, with many of them saying reducing output was technically very difficult and could lead to Russia losing market share to its competitors.

Tokarev said oil executives and government officials meeting in Moscow on Tuesday had reached the conclusion that talks with OPEC were needed to shore up the oil price.

“At the meeting there was discussion in particular about the oil price and what steps we should take collectively to change the situation for the better, including negotiations within the framework of OPEC as a whole, and bilaterally,” Russian news agencies quoted Tokarev as saying.

excerpted for Reuters

[Trumpinator]

.............If oil goes to $60 a barrel I am thinking Putin takes the rest of the eastern Ukraine.

[doldrumsforgop]

Likely also discussing Russian protection for the House of Saud as Obama has caused the US to be a bad partner to them.

This will cost our country dearly.

[Trumpinator]

Putin just told the world in his Syrian policy that Russia is a reliable ally and an even worse enemy to have. If you get into a bar fight, Putin told the world, he would be a good choice to watch your back. There is a cost to Russia being your bodyguard - but nothing is free in life - Communism is over after all.