Oil Prices Rise Following Saudi-Russian Agreement on Market Stability

Oil prices in global markets increased following an agreement between Saudi Arabia and Russia to stabilize prices. According to Bloomberg, Mohammed bin Salman, the Deputy Crown Prince of Saudi Arabia, and Vladimir Putin, the President of Russia, reached an agreement on Sunday to cooperate on price stabilization. Khalid Al-Falih, the Saudi Minister of Oil, is set to announce the details of this agreement on Monday at the G20 summit in China. Previously, the Russian President stated in an interview with Bloomberg that Iran could be exempt from any potential agreement to cut global oil production. He mentioned that Iran has started its production from a very low level after the lifting of sanctions, and asking Iran to cut production would not be fair. Oil prices had been on the rise last month due to speculation about an agreement among OPEC members and other oil producers regarding a freeze plan at the upcoming meeting in Algeria later this month. Oil prices in global markets increased by about 2.5% today compared to Sunday. Iran is prepared to increase oil production to 4 million barrels per day depending on demand. Meanwhile, Reuters reported that Mohsen Qamsari, the Director of International Affairs at the National Iranian Oil Company, stated that Iran is ready to raise production to 4 million barrels per day in the next 2 to 3 months based on market demand. Qamsari, speaking at the Argus oil conference in Singapore, said, 'We can increase crude oil production according to market needs.' After the lifting of nuclear sanctions, Iran is trying to return to its pre-sanction production level of 4 million barrels per day. According to Qamsari, Iran, which is the third-largest producer in OPEC, currently produces just over 3.8 million barrels of crude oil per day. Iran's oil sales have doubled since December, one month before the sanctions against the country were lifted. Iran's re-entry into the oil market has caused tensions with its main rival, Saudi Arabia, and has thwarted OPEC's efforts to limit production ceilings to raise prices. Iran's plans to regain market share after sanctions have yielded results among Asian customers, with four major Asian buyers increasing their imports from Iran in July by 61% compared to last year. Qamsari mentioned that the National Iranian Oil Company might increase production to 4.3 million barrels per day in the first quarter of next year and to 5 million barrels per day in the next 2 to 3 years. He stated that most of this increase would be related to heavy crude oil. He said, 'In our opinion, the market is more inclined towards heavy crude oil types, and for this reason, we are looking to introduce a new type of crude oil.' Ali Kardar, the CEO of the National Iranian Oil Company, told the Mehr news agency that the Minister of Oil, Bijan Namdar Zangeneh, will make the final decision on whether Iran will join the freeze plan or not. Meanwhile, the news agency quoted Amir Hossein Zamaninia, the Deputy Minister of Oil, as saying that Iran supports any action to revive prices while considering national interests and regaining its market share. Bloomberg reported in another article, quoting John Driscoll, a senior strategist at the energy services company GTD, who has over 30 years of experience trading crude oil and gasoline in Singapore, that producers may reach an agreement on production ceilings and price increases at the Algeria meeting, but ensuring full compliance and sacrificing national interests by OPEC and non-OPEC producers to achieve collective goals seems out of reach. The oil freeze issue is set to be discussed again on September 28 in Algeria among OPEC members and some other oil-producing countries.