Saudi Arabia willing to increase oil production if Russia reduces it from sanctions

The Kingdom has resisted calls from the White House to speed up production growth, despite oil prices being traded close to $120 per barrel, the highest level in a decade, arguing that the energy crisis could deteriorate significantly this year. Saudi Arabia believes it must retain reserve production.

But fears of a complete supply shortage have increased after the EU launched another round of sanctions against Moscow, including the ban on importing Russian oil shipments.

The EU has also agreed to an agreement with the United Kingdom to ban the security of Russian oil carriers later this year. Analysts said the move would likely significantly limit Moscow's ability to redirect oil to other regions.

The Saudi Arabia is aware of the risks and that it is not in their interest to lose control of oil prices”, said one person informed of how the kingdom operates.

Oil prices fell Thursday, dropping to a $112.80 barrel level at the start of the deal from $1 116.29 that was closed Wednesday. Prices reached the highest rate in two months, at over $120 per barrel this week.

Saudi Arabia's view is that while the oil market is undoubtedly tight, which has prompted price hikes, there are still no real restrictions, according to diplomats and industry sources informed about the discussions.

But this could change after the global economic recovery by Coddy-19, including the reopening of major cities in China, increases demand, while the likelihood that oil production in Russia will drop significantly has increased. Russia was producing more than 10 percent of the crude global oil prior to the invasion of Ukraine.

There have been tensions between the United States and Saudi leadership, including the Crown Prince Mohammed bin Salman, the de de facto ruler of the kingdom. Saudi Arabia has consistently rejected calls from the White House and the G7 to speed up production growth immediately.

But some visits in recent weeks by an American high-level delegation, including Brett McGourk, the White House's co-ordinator for Middle East politics and Amos Hochstein, the White House's envoy for energy, have helped improve relations, according to a person known in diplomacy.

People familiar with the talks said Saudi Arabia had agreed to a change of tone in efforts to calm prices, as part of a rapprochement with Joe Biden administration. It has also offered assurances that it will eventually respond by increasing production if the oil market is hit by a bidding crisis.