MOSCOW: Russia and Venezuela have held meetings in Moscow to discuss ways of driving global crude oil prices up from their low levels, which are very damaging to their economies.
Russia and Venezuela are discussing joint action against low oil prices, Russian Energy Minister Alexander Novak said in Moscow. Venezuelan Foreign Minister Rafael Ramirez was in Moscow for talks as part of a tour of several oil-producing nations, including Algeria, Qatar and Iran, aimed at developing a joint strategy.
Asked if he discussed joint moves to counteract the 30-percent fall in oil prices this year, Novak told reporters: “Yes, there is such an initiative. We discussed this theme and now we are working out those proposals on our side.”
Russia and Venezuela, like the other countries on Ramirez’ travel itinerary, are heavily dependent on revenues from oil exports for their national budgets. Crude oil prices are set in the context of a global market, so global geopolitical tensions and regional supply or demand surges or drops affect oil prices everywhere.
As a result, any drive to push oil prices back up can succeed only if oil-producing nations as a group agree to cut back aggregate production in the face of weaker demand caused by slower economic growth in China, Europe and other key markets – and by the US surge in shale oil production, which is reducing US demand for oil imports.
If major oil producing countries with large market positions refuse to go along with a global oil supply management strategy, oil prices may stay low for an extended period. And it appears that Saudi Arabia may be playing the spoiler in this game.