Updated 02:14 PM EDT, Fri, Oct 22, 2021

Venezuela’s Oil Minister Urging Russia & Saudi to Cut Oil Production as Prices Collapse

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Venezuela's Oil Minister Eulogio Del Pino is on a mission to convince Saudi Arabia and Russia to cut oil production as prices continue to collapse.

Del Pino is scheduled to meet Russian Energy Minister Alexander Novak in Moscow on Monday, Bloomberg reported. Afterwards, he will head to Qatar, Iran, and Saudi Arabia, the world's largest oil exporter.

Saudi Arabia and Russia are hesitant to agree to a reduction in oil output. One of the major reasons for that is because they are concerned that United States shale producers would benefit from any increase in oil prices following a potential cut, according to analysts Robin Mills and Edward Bell, the news outlet added.

"There's a minimal chance the Venezuelans will get them to agree to anything," Mills, chief executive officer of Dubai-based oil consultant Qamar Energy, told Bloomberg. "I don't think the conditions are there for an agreement."

Efforts to coordinate production cuts are made complex because of Saudi Arabia's goal of defending sales and Russia's failure to control production in winter months, when output cuts can harm fields, Bloomberg noted.

Novak said in an interview with Bloomberg Television last week that Venezuela asked Russia for a possible meeting between the Organization of Petroleum Exporting Countries, or OPEC, and producers like Russia that do not belong to the group. Venezuelan President Nicolás Maduro recently said that "OPEC and non-OPEC countries are close to an agreement," but did not specify, Bloomberg further reported.

Venezuela has requested an emergency meeting with its fellow OPEC members in January, saying in a letter that the slump in oil prices is causing serious repercussions on the group's most vulnerable members. The South American nation belongs to OPEC's Fragile Five members, which also includes Algeria, Iraq, Libya, and Nigeria.

Brent crude fell from $115 a barrel in June 2014 to less than $30 last month, Bloomberg noted. Saudi Arabia, OPEC's de facto leader, supplies around 40 percent of the world's oil. OPEC's pump in January is its highest output since 1996 after it restarted Indonesia's membership.

OPEC members hold two meetings annually to discuss market conditions, while the U.S. shale industry comprises thousands of private companies working alongside the world's largest oil firms, Bloomberg wrote. That hinders the U.S. to approve of production cuts, said Mills and Bell, a commodities analyst at lender Emirates NBD PJSC. The two added that cutting output will also result to higher oil prices that would benefit the U.S.

OPEC chose to end its previous 30 million-barrel-a-day production target last month, the news outlet reported. Mills said that the group is aiming for a steady market share by pushing higher-cost producers out of the market.

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