After a significant drop in oil prices over the recent months, Saudi Arabia and Russia, two of the world’s largest oil producers, have come to an agreement to freeze their oil production to counter a recession that has plagued economies and markets globally.
While the deal is in its initial stages and has yet to include Iran, it is significant in that it is the first co-op between producers from the Organization of Petroleum Exporting Countries (OPEC) and non-OPEC producers in 15 years. That said, Saudi Arabia is still open to further action should this deal yield fruitful results.
Joining Saudi Arabia, fellow OPEC members Venezuela and Qatar have also agreed to participate in the deal with Russia. After talks with Russian Energy Minister Alexander Novak, the deal, according to Saudi Arabia’s Minister of Oil Ali Al-Naimi, is the “beginning of a process” that may require “other steps to stabilize and improve the market”.
While this is a big step for the world’s oil producers, there are apprehensions from others who think that the market will not change if Iran will not reduce their production as well.
The group of countries involved intends to monitor prices and output of oil over the next four months and decide on the next course of action then.