Saudis, Russia at Odds Over Boosting Oil Output Amid Covid-19 Pandemic

Saudi Arabia and Russia deadlocked Monday over whether their producers’ alliance should boost crude output amid a resurgent pandemic, delegates said after a day of talks ended without a deal.

The 13-strong Saudi-led Organization of the Petroleum Exporting Countries met virtually Monday with 10 Russia-led producers, a group that together has been dubbed OPEC-plus, in the first of their monthly meetings to review global oil demand. Last month, they agreed to increase production by 500,000 barrels a day, bringing their net cuts since the start of the pandemic to some 7.2 million barrels a day.

On Monday, they were scheduled to decide whether to continue to raise production or stand pat.

Saudi Arabia and most of the broader alliance backed holding steady for at least another month, delegates said. These countries are concerned a new variant of the Covid-19 virus is threatening a resurgence of the pandemic, while vaccination programs are not progressing as fast as expected.

“Even in this general optimistic environment, I want to urge caution,” Saudi Energy Minister Abdulaziz bin Salman said during opening remarks before the online meetings. “Do not put at risk what we have achieved for the sake of an instant illusionary benefit.”

Moscow, however, pushed for an increase in output by another 500,000 barrels a day, the delegates said. Russia sees oil consumption coming back and is concerned about losing market share to U.S. producers, which are not subject to restrictions, these people said.

“We hope that in 2021 we will be able to see the recovery in demand, including as a result of the vaccination which is already underway in numerous countries,” Russian Deputy Prime Minister Alexander Novak said ahead of the meeting.

The group is set to meet again Tuesday, hoping to iron out its differences. News of the disagreement sent oil prices lower. In late trading in London, Brent, the international benchmark, was down 0.7% to $51.40 a barrel while West Texas Intermediary had fallen 1.1% to $47.90 a barrel.

Saudi Arabia and Russia clashed last year over oil policy, effectively triggering a global price war when each opened up their spigots and flooded the market. That unfolded just as the coronavirus was spreading rapidly from China to the rest of the world. Governments around the world started locking down their economies, and oil demand tumbled.

Amid a steep price drop, Saudi Arabia and Russia abandoned their rivalry, and OPEC-plus agreed to record cuts of 9.7 million barrels a day. Part of the deal called for the eventual reinstatement of production in increments of 2 million barrels a day. The first of that added production came online over the summer, while members agreed last month to bring on another 500,000 barrels a day in January.

Write to Benoit Faucon at benoit.faucon@wsj.com and Summer Said at summer.said@wsj.com

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Appeared in the January 5, 2021, print edition as ‘Saudis, Russia Split on Oil Output.’