Thanks to diplomatic effort by Venezuela, Saudi Arabia's powerful oil minister Ali al-Naimi will meet his Russian counterpart Alexander Novak, in Doha today. Venezuela has been calling for cooperation between largest OPEC producer Saudi Arabia and largest non-OPEC producer Russia to cooperate and help coordinate production cut that would stabilize the market. However both the parties in the past have shrugged off the idea of production cut. Saudi Arabia previously declared their strategy is to keep price low and push out high cost producers from the market and the country will not cut production unless bigger players join in. Russia on the other hand sighted technical freezing difficulty as a challenge to cut production and mentioned Russia stands ready to compete at any price.
Nevertheless, importance of such meeting can't be denied, especially when it is being organized during tough times.
Moreover, this meeting is coming at a time when Russia and Saudi Arabia are at loggerheads over several issues. We expect such issues to dominate the meeting and there won't be just talks on production cut or how to balance market. It would be surrounding bigger strategy.
- With deterioration of Russia's relations with Europe, Saudi Arabia has tried to grab share in European markets, which has been Russia's playground. Russia biggest oil producer Rosneft has repeatedly said, country should defend its market share, rather than focus on price.
- Russia is also at political loggerheads with Saudi Arabia, over the future of Bashar-al-Assad, of Syria. In recent days, Saudi Arabia has signaled that it stands ready to supply ground troops in Syria to defend its interest if US could provide air support.
As of now, it is really not clear, how can these two giants reach a common ground, nevertheless it is also important to recognize that both the countries' representatives are flying thousands of mile to reach neutral ground in Qatar, just for nothing.
Market seems to be in expectations of something as oil price has jumped more than 15% from recent low in three days.
WTI is currently trading at $31/barrel and Brent at $4.3/barrel premium.
Meeting has started as of now.
