quote:
Days ahead of the key OPEC+ meeting on June 4, the leading producers in the group, Saudi Arabia and Russia, are at odds about output policy.

Riyadh has grown increasingly frustrated with Russia, which apparently hasn't kept its end of the deal and isn't reducing oil production as pledged, complicating the Saudi efforts to lift oil prices to at least the Kingdom's oil price breakeven level of $81 per barrel.

So, officials from Saudi Arabia have expressed their frustration with Russia and have asked Russian officials that Moscow stick to its pledge to reduce oil production by 500,000 barrels per day (bpd) until the end of the year, sources with knowledge of the matter told The Wall Street Journal.

Russia insists that it is cutting output as planned, but analysts aren't convinced, and since Moscow has ceased any official reporting about its production levels, the market looks at tanker-tracking data. And the data suggests that even if Russia is following through on its commitment to cut output, its oil supply to international markets is growing, especially in the key Asian markets long dominated by Saudi Arabia and other Middle Eastern producers-China and India.

With cheaper crude, Russia has been aggressively growing its market share in Asia's top two importers and is now the number one supplier to both China-where it toppled Saudi Arabia from the top spot earlier this year-and India, where Russia is now selling more crude than Iraq and Saudi Arabia combined, per Vortexa data cited by the Journal.

The Saudi frustration makes sense since the Kingdom is not only losing market share in the most important oil-importing region, Asia, but its own 500,000 bpd cuts have failed to lift oil prices, which are now roughly at the level they were before the surprise OPEC+ cuts announced in early April.

For Russia, it makes sense to supply growing volumes to the two top importing countries in Asia, which also have the benefit (for Moscow) of welcoming tankers of the so-called "dark fleet" and not abiding by the G7 price cap on Russian crude of $60 per barrel.

quote:
Last week, Russian President Vladimir Putin said that energy prices were approaching "economically justified" levels.

For Saudi Arabia, however, oil below $80 doesn't appear to be "economically justified." Hence, Riyadh's frustration with Moscow regarding the next OPEC+ move.

Saudi Arabia needs oil prices at $80.90 per barrel to balance its budget this year, the International Monetary Fund (IMF) said earlier this month.

Early on Monday, Brent was trading at around $77 per barrel.

LINK

This could get interesting to watch. Last time Russia and the OPEC countries (namely Saudi Arabia) had a serious disagreement on production output from the OPEC+ counties, it led to the 2020 Oil Price War, which when combined with Covid travel restrictions and shutdowns, sent oil prices “negative”.

It obviously won’t be that drastic this go-round, as we don’t have a virus (that we know of), coming out of a Chinese lab. But this with what still appears to be a bearish oil market, another production/price war could cause a further fall.