Putin calls for reduction in global oil inventories to 'reasonable levels'

Russia is considering joint investments in Saudi petrochemicals sector, Russian leader says

On Sunday, Mr Putrin said more needed to be done to bring global inventories to "reasonable levels", signalling Moscow's continued support for the Opec+ pact. AP

Russian President Vladimir Putin is calling for a reduction in global oil stocks to "reasonable levels", signalling Russia's willingness to work with Saudi Arabia in thwarting efforts aimed at destabilising oil markets.

Mr Putin headed to the kingdom for a visit on Monday where the two sides are also expected to discuss join energy investments.

Russia, the biggest sovereign crude producer in the world, would co-operate with Saudi Arabia, Opec's biggest oil exporter, to "reduce to zero attempts to destabilise the oil market", he told Al Arabiya TV on Sunday.

Mr Putin's arrival in the kingdom comes amid a strengthening of ties between the two countries, which lead an alliance of Opec and non-Opec states to balance the markets, which had crude prices plunge below $30 per barrel in the first quarter of 2016.

To tackle the global oversupply, Opec+ has been cutting back 1.2 million barrels per day of output since 2017.

The pact is expected to hold until March next year with Saudi Arabia leading the Opec members in compliance.

The kingdom's output averaged 9.9 million bpd in the first eight months and 9.8 million bpd in the second quarter of this year, below its supply agreement of 10.3 million bpd under Opec+ deal, Moody's said last month.

Mr Putin's visit comes at a politically sensitive time for the region, just two days after an Iranian oil tanker crossing Saudi territorial waters in the Red Sea came under attack.

The incident followed a highly volatile month for the oil markets after September 14 attacks on Saudi oil facilities halved the country's output, knocking out 5 per cent of global supply.

Brent finished higher last week after Friday's attack on Iranian tanker Sabiti. It surged 2.2 per cent to finish at $60.51 per barrel.

West Texas Intermediate, the benchmark tracking largely North American crude grades, also rose above 2 per cent to finish at $54.70 per barrel.

"We are considering some good joint projects," Mr Putin said. "Our Direct Investment Fund and the Public Investment Fund of Saudi Arabia have jointly established a $10 billion platform ... $2bn has already been invested."

Work is under way on other schemes with possible projects likely to be finalised in Saudi Arabia's downstream sector.

“We also consider it possible to operate on the territory of Saudi Arabia," Mr Putin said. "One of our companies is exploring the possibility of building a petrochemicals facility."

Sibur Holding, a Russian petrochemicals company, was considering more than $1bn in investments in the kingdom, he said.

The two sides are also looking at "fostering partnerships" in military and defence.

'We have been negotiating for a long time," Mr Putin said.