Saudi Arabia signals support for Russia in Opec+

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• Brent crude trading at about $112 a barrel
• Saudi blames prices on lack of global refining capacity and taxes
• New production deal for Opec+ quotas due in three months 

Saudi Arabia has signalled it will stand by Russia as a member of the Opec+ group of oil producers despite tightening western sanctions on Moscow and a potential EU ban on Russian oil imports. 

Prince Abdulaziz bin Salman, the energy minister, told the Financial Times that Riyadh was hoping “to work out an agreement with Opec+ … which includes Russia”. 

A new production deal is on the agenda as Opec+ output quotas are set to expire in three months while energy consumers grapple with oil prices at their highest levels in a decade. 

Prince Abdulaziz’s comments are a sign of support for Russia from a traditional US ally as the west tries to isolate the country and its oil production falls, raising questions about its place in the Opec+ group. 

Riyadh has been resisting western pressure to raise crude output to help bring down prices in the wake of Russia’s invasion of Ukraine, insisting there is not a lack of supply. 

Prince Abdulaziz said it was too early to say what a new agreement might look like given the uncertainties in the market, but added that Opec+ would increase production “if the demand is there”. 

Brent crude, the international benchmark, was trading at about $112 a barrel last week. Prince Abdulaziz blamed soaring prices at petrol pumps on a lack of global refining capacity and taxes. 

“The determinant of the market is refinery capacity, and how do you unlock it,” he said. “At least for the last three years, the whole world lost around 4 million barrels of refining capacity, 2.7 million of them just from the beginning of Covid.” 

Some members of Opec+ have consistently failed to meet their production quotas, and Saudi and the UAE are the only producers who have the capacity to significantly increase output. After Russia launched its invasion in February, the west initially avoided imposing sanctions on Russian energy assets because of Europe’s heavy dependence on the country’s gas and oil exports. 

The US and UK banned oil imports from Russia in March. But EU states remain divided on measures to phase out Russian oil supplies, and this month dropped a proposal to ban the EU shipping industry from carrying Russian crude. 

Prince Abdulaziz said politics should be kept out of Opec+, adding the alliance would be needed to bring about “orderly adjustments” in the future amid uncertainty about coronavirus lockdowns in China, global growth and supply chains. 

He said that to ease bottlenecks in production and refinery capacity governments had to encourage the industry to invest in hydrocarbons even as nations switch to cleaner energy sources. “This situation needs people to sit together, focus, take out the masquerade and the so-called political correctness … it’s about trying to relate to existing reality and find remedies to it.”