Russia doesn’t plan to increase crude production given the huge oversupply in the global market, according to a government official, a potentially dovish signal in the price war with Saudi Arabia. But Russia isn’t yet holding talks with Saudi Arabia on the situation, he said, speaking on condition of anonymity to discuss matters that aren’t yet public. The Gulf kingdom is ramping up output after failing to reach an agreement last month with Moscow to deepen production cuts in an effort to support prices. Crude has since plunged to the lowest levels in decades as demand has evaporated with much of the developed world on lockdown amid the spread of coronavirus.
The Russian official said it made no sense for producers to boost output in the current situation. Energy Minister Alexander Novak said last month Russia can raise prodution by 200,000 to 300,000 barrels a day in the short term, and by as much as 500,000 barrels a day in the near future. That’s a fraction of the additional volume Saudi Arabia has pledged to pump.
On Tuesday evening in Washington, President Donald Trump said the U.S. would meet with Saudi Arabia and Russia with the goal of staunching the historic plunge in oil prices. Trump, said he’s raised the issue with Russian President Vladimir Putin and Saudi Crown Prince Mohammed bin Salman. “They’re going to get together and we’re all going to get together and we’re going to see what we can do,” he said. “The two countries are discussing it. And I am joining at the appropriate time, if need be.”
U.S. Energy Secretary Dan Brouillette and Novak, his Russian counterpart, had a “productive discussion” on Tuesday and agreed to “continue dialog among major energy producers and consumers, including through the G20,” the Department of Energy said in a statement. The agency did not detail any steps the nations are considering to stem the downturn.