Saudi, OPEC may make up for Russian oil output loss as Biden visit looms


The logo of the Organization of the Petroleoum Exporting Countries (OPEC) is seen at OPEC’s headquarters in Vienna, Austria June 19, 2018. REUTERS/Leonhard Foeger/File Photo

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  • Western sanctions have driven down Russian production
  • OPEC+ meets Thursday, may address Russian output issue
  • U.S. diplomats have been working on Biden’s Saudi visit
  • Biden faces inflation at 40-year high, low ratings

DUBAI/LONDON/RIYADH, June 2 (Reuters) – Saudi Arabia and other OPEC states may boost oil production to offset a drop in Russian output, a move that could ease sky-high oil prices and surging inflation and may also pave the way for an ice-breaking visit to Riyadh by U.S. President Joe Biden.

Two OPEC+ sources said the group was working on making up for a drop in Russian oil output as Russia’s production has fallen by about 1 million barrels per day (bpd) as a result of Western sanctions on Moscow over its invasion of Ukraine.

Sources said OPEC+ may speed up output increases to 650,000 bpd a month in July and August, up from the initial plan to raise output by 432,000 bpd a month in July, August and September.

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Oil fell $1 to about $115 a barrel on news of the possible OPEC output boost, but it was still near a more than decade high after a spike this year close to an all-time peak of $147.

One OPEC+ source familiar with the Russian position said Moscow could agree to other producers raising production to compensate for Russia’s lower output, although not necessarily making up all the shortfall.

“Ultimately, the compensation could be agreed,” the source said, but added that a decision might not be taken at Thursday’s meeting of OPEC+, an alliance of the Organization of the Petroleum Exporting Countries, Russia and others.

However, a Gulf source in OPEC+ said a decision on the matter was “highly possible” at Thursday’s ministerial meeting.

U.S. diplomats have been working for weeks on organising Biden’s first visit to Riyadh after two years of strained relations because of disagreements over human rights, the war in Yemen and U.S. weapons supplies to the kingdom.

U.S. intelligence has accused Saudi Crown Prince Mohammed bin Salman, known as MbS, of approving the 2018 killing of Saudi journalist Jamal Khashoggi, a charge the prince denies.

Saudi Arabia and its neighbour the United Arab Emirates have been frustrated at the Biden administration’s opposition to their military campaign in Yemen and failure to address Gulf concerns about Iran’s missile programme and its regional proxies.

With the Ukraine war adding to a tight crude market, the U.S. administration has sought more supplies from Gulf allies such as Saudi Arabia, as well as from Iran whose output has been restricted by U.S. sanctions that could be lifted if a nuclear deal is reached, and Venezuela, also under U.S. sanctions.

APPROVAL RATINGS

Rocketing gasoline prices has driven U.S. inflation to a 40-year high, hitting Biden’s approval ratings as he approaches mid-term elections. Biden, meanwhile, has refused so far to deal with MbS as Saudi Arabia’s de-facto ruler.

A source briefed on the matter…



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