As the oil market meltdown intensified a week after the new OPEC+ production cut deal, Saudi Arabia has hinted for a second time in two weeks that it is ready to take further measures with OPEC to restore oil market stability.
At a Tuesday meeting of the Saudi cabinet chaired by King Salman bin Abdulaziz Al Saud, discussed Saudi Arabia’s “keenness to achieve stability in the oil market, its affirmation with the Russian Federation of a firm commitment to implement agreed targeted cuts over the next two years, their continuing monitoring of oil market situations closely, and being prepared to take further measures jointly with OPEC+ and other producers,” the official Saudi Press Agency reported.
Collapsing global oil demand and shrinking storage capacity have pressured oil prices since the OPEC+ group came up with a new plan to restore ‘stability on the market’ – its proxy PR buzzword for driving oil prices higher.
The market and analysts, however, see the new deal as ‘too little too late’ to make a meaningful impact on growing global inventories amid crashing demand.
Despite the OPEC+ deal, prices continued on a downward spiral last week as inventory reports in the United States showed a record-breaking commercial crude build amid crashing demand.
Last Thursday, the energy ministers of Saudi Arabia and Russia, Prince Abdulaziz bin Salman, and Alexander Novak, respectively, held a phone conversation and issued a statement via the Saudi Press Agency saying that both nations were “strongly committed to implement the agreed target cuts over the next two years and will continue to closely monitor the oil market and are prepared to take further measures jointly with OPEC+ and other producers if these are deemed necessary.”
Despite the typical Saudi jawboning of the market, the demand destruction and the swelling storage with oversupply nowhere to go led to a historic crash in WTI Crude into negative territory on Monday.
By Tsvetana Paraskova for Oilprice.com