Saudi Arabia Ready to Pump More Oil if Russian Output Sinks Under Ban

According to five sources involved with the negotiations, Saudi Arabia has suggested to western allies that it is willing to increase oil production if Russia’s output falls significantly as a result of sanctions. Despite oil prices nearing $120 a barrel, the highest in a decade, the kingdom has rejected efforts from the White House to raise output, claiming that the energy crisis might worsen considerably this year. Saudi Arabia feels it is necessary to maintain spare production capacity.

However, worries of actual supply shortages have grown after the EU imposed more sanctions on Moscow, including a prohibition on importing Russian oil via seaborne shipments into the bloc. Later this year, the EU and the UK will agree to prohibit the insurance of ships transporting Russian oil, a move analysts say could significantly limit Moscow’s ability to divert oil to other areas. “Saudi Arabia is aware of the dangers and understands that losing control of oil prices is not in their best interests,” a source familiar with the kingdom’s thinking said.

Oil prices fell sharply on Thursday, hitting a low of $112.80 a barrel in early trading, down from $116.29 at Wednesday’s close. This week, oil prices surpassed $120 per barrel for the first time in two months. Saudi Arabia believes that while the oil market is undoubtedly tight, which has boosted price rises, there are no genuine shortages yet. The discussions took place ahead of the Opec+ oil producer alliance’s monthly meeting on Thursday.