Market News

BY  Ilya Arkhipov

(Bloomberg) -- Russia and Saudi Arabia are ready to cooperate closely to keep the global energy market stable, the Kremlin said in an emailed statement after President Vladimir Putin and Saudi Arabia’s de facto leader, Crown Prince Mohammed Bin Salman, held their second phone call this week.

The two spoke “extensively” about the OPEC+ cooperation, continuing an Oct. 13 conversation during which they reviewed efforts to balance supply and demand in the oil market and boost the global economy. The calls came before a small group of the world’s main oil exporters are scheduled to review compliance with production cuts on Oct. 19.

With new coronavirus outbreaks in Europe and the Americas weighing on demand, many in the market question whether OPEC producers and their allies will increase output by 2 million barrels a day from January as part of a plan to taper cuts started in May. The group -- an alliance of the Organization of Petroleum Exporting Countries and others such as Russia and Mexico -- is set to decide its policy when all members meet on Nov. 30-Dec. 1.

Earlier this week, Russian Energy Minister Alexander Novak and his counterpart from the United Arab Emirates, Suhail Al Mazrouei, said that, for now, the group plans to proceed with the supply boost as scheduled.

At the same time, OPEC’s joint technical committee on Friday warned that under a negative scenario global oil stockpiles could increase by an average 200,000 barrels a day next year. The scenario, which is not the base case for the group, could materialize if Libya manages to revive supply and the pandemic hits demand harder than expected, according to a document seen by Bloomberg.

Putin and the crown prince also discussed cooperation in fighting the pandemic and the possibility of using Russia’s Sputnik V vaccine in Saudi Arabia, the Kremlin said.

(Updates with background on alliance starting in third paragraph.)