King Salman, Putin discuss oil partnership, vaccine production

Oil falls below $42 to lowest since July

FE Team | Published: September 08, 2020 21:58:03

DUBAI, Sept 08 (Arab News): Saudi King Salman bin Abdulaziz told President Vladimir Putin of Russia of his keenness to strengthen bilateral ties between the two countries, with special emphasis on their partnership within the OPEC+ alliance of oil producing countries.
In a phone call between the new mega-development of NEOM and Moscow, the two leaders also discussed the work of the G20 under the Saudi presidency ahead of the summit in just over two months' time and Russian advances toward developing a vaccine against the Covid-19 coronavirus.
According to a statement from the Saudi Press Agency, King Salman expressed "satisfaction over the increasing trade exchange between the two countries, stressing the constructive role of the Russian Federation in OPEC+ in achieving stability and balance in the oil market."
President Putin highlighted the "fruitful cooperation with Saudi Arabia in the field of energy."
The conversation comes as oil markets - buoyed for the past four months by the historic cuts deal led by the two biggest producers in OPEC+ - come under renewed pressure as doubts emerge about the strength of recovery in global energy demand.
Brent crude, the international benchmark, fell below $42 in market trading yesterday, off its recent best of more than $46.
The OPEC+ committee of ministers meets by virtual conference in 10 days' time to assess the current status of the world's oil markets, with both Saudi Arabia and Russia committed to seeing through the disciplined strategy of cuts, compliance and compensation that has brought them back from the carnage of April.
The two leaders also discussed the work of the G20 to "mitigate the effects of the Covid-19 pandemic and the return to normal life."
Putin highlighted the continuing cooperation between the two countries in efforts to find a vaccine to the disease. Russia has developed the first vaccine - Sputnik V - to be registered with a national health administration, and is working in partnership with the Kingdom on the next crucial stage of widespread trials on humans in Russia and other countries.
The Russian vaccine was recently favorably judged in a peer-reviewed study in the prestigious British scientific journal The Lancet, which found it to be effective in developing antibodies with no serious side effects.
Saudi Arabia is one of five countries in which wider human trials will be held, the Russians have said, and scientists from the Kingdom have been in touch with Moscow's Gamaleya Institute, where the vaccine was developed.
In Lebanon, the total number of Covid-19 patients has exceeded 20,000, with the country's health minister on Monday describing the situation as "delicate and in need of full awareness by all citizens."
A Reuters report adds: Oil fell below $42 a barrel on Tuesday, its 5th session of decline, pressured by concerns that a recovery in demand could weaken as coronavirus infections flare up around the world.
Coronavirus cases rose in 22 of the 50 US states, a Reuters analysis showed on the Labor Day holiday weekend. New infections are also increasing in India and Britain.
Brent crude LCOc1 fell 61 cents, or 1.5 per cent, to $41.40 a barrel at 0918 GMT, and earlier slipped to $41.21, the lowest since July 1. US West Texas Intermediate (WTI) crude CLc1 dropped $1.36, or over 3 per cent, to $38.41.
On Monday, crude fell after Saudi Arabia's state oil company Aramco cut the October official selling prices for its Arab light oil, a sign demand may be stuttering.
"The price weakness is continuing today," said Eugen Weinberg, analyst at Commerzbank. "We believe this is attributable first and foremost to demand concerns."
Both oil benchmarks have dropped out of the ranges they were trading in throughout August. Brent has fallen more than 8 per cent since the end of August.
"The streak of losses is driven by a stalling crude demand outlook for the rest of the year," said Paola Rodriguez-Masiu, analyst at Rystad Energy.
Still, oil has recovered from historic lows hit in April, thanks to a record supply cut by the Organization of the Petroleum Exporting Countries and allies, known as OPEC+. The producers are meeting on Sept. 17 to review the market.
Crude has also found support from a weaker US dollar, although the US currency was up on Tuesday. The market could rally beyond $45 later this year, said Norbert Ruecker, head of economics at Swiss bank Julius Baer.
"Fundamentally, things have not changed," he said. "Demand is recovering, supply remains constrained, and the storage overhang is slowly disappearing."