Joint Russia and Venezuela Deal with Oil Price Decline

"Deutsche Welle" reported on November 19th , that Russian Energy Minister Novak revealed in Moscow that he had held a meeting with Venezuelan Foreign Minister Rafael Ramirez dealing with the continued falling of oil prices, and agreed to take "joint action" to confront with the growing downside of international oil prices. Now Russia is developing appropriate measures.

 

Ramirez's visit to Moscow is only a step to develop "joint strategy". Previously, he has visited Algeria, Qatar, Iran, and many other oil-producing countries. With the decreasing global demand caused by the slowdown of China, EU and other major economies, and the surge of US shale oil production leading to import reduction, only when the oil producers work together to cut production will they be able to increase oil price. Otherwise the oil price may keep at a low level for a long time. In addition, Saudi Arabia may become the spoiler of the game. 

 

As a great country of oil production and reservation, Saudi Arabia has the capability to balance the world oil supply and demand. Normally, Saudi Arabia should have cut production with other producers to support oil prices. Some analysts believe that, in terms of geopolitics, America colludes with Saudi Arabia to bring down oil price, so as to crack down other countries’economy such as Russia, Venezuela, etc. However, it was denied on November 12th by Saudi Oil Minister Alial-naimi. Other market analysts think Saudi tries to use some jiggery-pokery to leverage the market. For example, MLV & Co.analyst Chad Mabry feels that Saudi purposely lowers down oil export price to America obviously aims at American shale oil producers, because shale oil is the biggest threat in its market share.   

 

Saudi Arabia had once announced that it was prepared to accept $70~80/barrel within a year.