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OPEC+ seeks 'fair' oil price, Saudi foreign minister says in meeting with Russian counterpart

Highlights

Prince Farhan says supporting global economy a priority

Russia's Lavrov says oil market cooperation necessary

Saudi Arabia calls for international response to missile attacks

Dubai — Saudi Arabia and Russia pledged to continue cooperation on the OPEC+ production cut agreement, as Saudi foreign minister Prince Faisal bin Farhan said March 10 the group is aiming for a "fair" price for crude oil.

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"I would like to assure that we and Russia would like a oil price which is fair to consumers and to producers," Saudi foreign minister Prince Faisal bin Farhan said at a press briefing with Russian counterpart Sergei Lavrov in Riyadh. "This is what OPEC+ looks to achieve and there is good coordination in this initiative and we continue in working to support what benefits the global economy."

Russia and Saudi Arabia, two of the world's top crude producers, co-chair the OPEC+ alliance, which controls roughly half of global production capacity and has instituted deep oil output cuts as the world continues to grapple with the coronavirus pandemic.

But the countries do not always see eye to eye, with Russia often pushing for looser production quotas, while Saudi Arabia has favored a more cautious, disciplined approach to supply management.

The ministers' meeting comments follow the most recent OPEC+ decision on March 4 to roll over most quotas for another month, except for a 125,000 b/d rise granted to Russia and a 20,000 b/d increase allowed for Kazakhstan. Saudi Arabia also said it will maintain its voluntary 1 million b/d cut, as well, to continue tightening the market.

"We share a view that it is necessary to develop our cooperation in the global hydrocarbon market, to closely coordinate our actions, including in the OPEC + format. They are yielding results," Russian foreign minister Sergei Lavrov said.

Despite their differences, Lavrov said he didn't see any obstacles that could get in the way of Russia's cooperation with Saudi Arabia.

"We reaffirmed our focus on strengthening our cooperation in the global hydrocarbons market. We do not see any events at this stage that could undermine the interest in our mutual cooperation. This is an objective reality, and it has a long-term, sustainable nature, according to my assessment," Lavrov said.

The press conference took place during Lavrov's tour of the Persian Gulf, where he has also visited the UAE and will next go to Qatar.

'Strong stance' on Iran

The OPEC+ cuts have supported a robust market rally in the past few months, even though global oil demand has yet to recover to pre-pandemic levels. Recent Dated Brent prices have hit their highest since January 2020, with S&P Global Platts assessing the benchmark at $67.255/b on March 9, a rise of about 33% since the start of the year.

The rapid gains have prompted some analysts to warn that the market could overtighten, and leaders in India, a key customer of OPEC+ crude, have complained that prices have risen too high.

Missile attacks by Iranian-backed Houthi rebels in Yemen in the past week that have targeted Saudi sites, including the facilities of state oil giant Saudi Aramco, were also discussed by the minister.

Farhan said Saudi Arabia would take deterrent action to protect its oil infrastructure, following a drone attack on an Aramco tank farm at the port of Ras Tanura on March 7, as well as smaller bombardments on March 8 and March 4. Ras Tanura is the world's largest oil export complex.

"Such attacks require a strong stance by the international community in confronting the perpetrators," Farhan said. "Efforts must be combined to stop the sources of the continuation of the conflict [in Yemen], the most important of which is Iran, as it supplies the Houthi militia with advanced weapons, including ballistic missiles and booby-trapped drones."