Saudi Arabia denies contact with Russian Federation over OPEC

An oil barrel with the Saudi Arabia and Russia flags

"DOE is moving quickly to support U.S. oil producers facing potentially catastrophic losses from the impacts of COVID-19 and the intentional disruption to world oil markets by foreign actors", Energy Secretary Dan Brouillette was quoted as saying in a press statement on the department's website.

Until recently, the Organization of the Petroleum Exporting Countries (OPEC) and Russian Federation had cooperated closely since 2016 to curb production, support prices and protect their precious revenues.

This comes as Texas Railroad Commissioner Ryan Sitton tweeted on Saturday that some oil companies are getting letters from United States shippers, in which they are calling for production cuts because they are out of storage.

The Brent crude price was around $65 per barrel at the start of January.

Sorokin said Europe has been stocking cheap oil and that storage facilities in the region will be overwhelmed in just over a month.

The Houston Chronicle also cited Ed Longanecker, president of the Texas Independent Producers & Royalty Owners Association (TIPRO), as saying that in the letters to oil companies, shippers state that they plan to terminate or change crude purchase contracts against the backdrop of plummeting demand and refinery slowdowns.

They included: "During this time of pandemic and global economic crisis, the Kingdom of Saudi Arabia has chosen to settle scores in the oil market". The Rotterdam deliveries, S&P Global says, are part of a long-term effort by Saudi Aramco to increase the company's crude oil market share in Europe, where Russian oil has traditionally been dominant. Washington has already taken emergency measures aimed at preventing the collapse of the shale industry, announcing last week that it would buy up some 77 million barrels of crude on the domestic market to shore up the strategic oil reserve.

Sorokin told Reuters earlier this month that he expected to see the first signs of lower oil production at costly projects worldwide in 4-6 months.

Faith Birol, head of the International Energy Agency, yesterday said oil prices could fall by 20 percent with 3bn people around the world on lockdown.

Sorokin said on Friday that OPEC and the other countries, a group known as the OPEC+, have still been in contact.

Oil prices collapsed to their lowest levels in decades in March amid coronavirus concerns and OPEC+'s failure to reach a deal on production cuts, which prompted Riyadh and its allies to open the taps.



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