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Moscow, Riyadh to Maintain Oil Output Levels

Moscow, Riyadh to Maintain Oil Output LevelsMoscow, Riyadh to Maintain Oil Output Levels

Russia and Saudi Arabia, the world's two biggest oil producers, indicated on Friday that they are not pulling back from huge crude output levels that have helped send prices tumbling.

Russia said it produced oil in September at levels not seen since the fall of the Soviet Union, pumping an average of 10.74 million barrels a day, government data showed on Friday. Oil production increased 0.4% from August, Nasdaq reported.

On the same day, Saudi Oil Minister Ali al-Naimi said his country would continue investing in oil and gas, saying his country remained committed to energy resource development, according to a Saudi Press Agency report.

Riyadh has ramped up production above 10 million barrels a day for the past few months.

The output from those two countries adds to an already oversupplied global oil market, even with American output showing signs of weakness.

Oil prices have fallen more than 50% in the past year, as world supplies outpace demand by around 2 million barrels on any given day.

It is also the latest indication that Russia is not prepared to join OPEC in trimming production to prop up prices. The organization has indicated that it will only consider a cut if other big suppliers, such as Russia, join it. Several OPEC members have tried to woo the country.

Saudi Arabia's budget, which relies on oil exports for about 90% of its revenue, has also been hit. The International Monetary Fund forecasts the Saudi government will run a budget deficit this year of around 19.5% of gross domestic product, compared with a deficit of 3.4% of GDP last year.

Deutsche Bank had estimated that Russian output this year will average around 10.6 million barrels of crude a day. That is above the 10.58 million barrels a day the country produced last year, a level of output not seen since the end of the Soviet Union.

Financialtribune.com