(MENAFN- Arab Times) Why indeed should Saudi Arabia reduce oil production and not Russia? Russia today is the biggest oil producer in the world as it is producing more than 10.5 million barrels a day. Inspite of that, it is complaining that the excess oil is affecting its economy and its currency value has reduced by more than 50 percent. Meanwhile, its closest allies Venezuela and Iran are insisting that Saudi Arabia must reduce its crude oil production in order to stop the oil prices from sliding further despite the last OPEC agreement of November 2014 that the non-OPEC members should limit oil production. Can anyone explain this situation?
About 70 percent of Russia's revenues are from oil and gas - $300 billion from oil and $80 billion from gas annually. It is the largest producer of oil and gas in the world. Despite its global position, it is urging its friends and allies to support crude oil production from only OPEC members while it is pushing for maximum throughput, which is further weakening the oil prices because of Russia's stubborn stance and approach of blaming others. Since oil prices have fallen to almost $40 per barrel, these friends and allies of Russia are blaming only Saudi Arabia instead of blaming the non-OPEC producer which is also the biggest oil producer in the world.
There is no point in them visiting Saudi Arabia and persuading it to reduce its production when they should actually be visiting Russia, which is the main culprit. For a long time, Saudi Arabia has been leading the oil producers in working on stabilizing the international oil prices. OPEC has been active and taking full responsibility for restoring the oil prices. The game is now getting better as more players and newcomers join it. Others must share and respond to the new development. The honeymoon period is over and the non- OPEC members must take up new roles. Russia has been benefiting from the stance of Saudi Arabia for over 30 years. It is now time for Russia to show some appreciation and pay back some of the credits.
Oil prices will continue to slide and may even reach $30 per barrel because of the unlikelihood of implementation of effective solutions in the near future. With the presence of surplus oil all over the world, demand is not likely to increase any time soon due to which the decline in the oil prices may continue. Why doesn't Russia take the lead instead of sending its allies and friends to OPEC countries? They know very well that the main cause for this oil crisis is the non-OPEC producers such as Canada and USA, which produce nearly 10.5 million barrels of shale oil a day.
The solution is simple and is in the hands of the Russians. Once the right move is made and necessary action is taken, others will follow. Russia must cut down its production. Its allies and friends must understand that there is no point in visiting and convincing Saudi Arabia. They have to turn their attention to only Russia and no other country.
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