Saudi Arabia and Venezuela Talk Oil Prices as Maduro Fixes to Lobby OPEC Abroad

Santa Elena, September 23rd, 2015. (venezuelanalysis.com) –Venezuelan Foreign Minister Delcy Rodriguez said Saturday evening that Saudi King Salman and President Nicolas Maduro had spoken on the phone and reached an understanding concerning oil cooperation.

“Both heads of state agreed to deploy joint efforts to recover the stability of the oil market and strengthen OPEC,” Rodriguez said on Twitter.

Maduro has lobbied for months for an emergency meeting of the Organization of Petroleum Exporting Countries (OPEC) and coordination with non-OPEC oil producers to cut production in order to stem the downward trend in oil prices, which last month reached a six-year low.

Venezuelan crude now hovers just above $40 a barrel which, in stark contrast to last year’s $100 barrel, has played a major role in the country’s current economic strife. 

The South American nation relies on oil for 97 percent of its foreign income.

Despite Rodriguez’s affirmations, Saudi Arabian representatives have previously said they see no need to interfere in the oil market, or call an emergency summit.

Indeed, analysts have pointed to the Gulf nation, the largest oil exporter in the world, as a key player in a game of strategy that has seen a decline in prices as nations vie for market share.

In response, Venezuela recently tried a different tactic. Rather than aiming for production cuts, government officials alluded last week to a proposal that would focus on sustaining a price floor based on quarterly analyses.

“The minimum, minimum price should be $70,” Maduro said during a televised speech last week. “Oil at $70 a barrel guarantees investments needed for global energy and economic stability.”

“This is a win-win proposal. Nobody wins with unstable prices,” the Venezuelan leader added.

Venezuelan Oil Minister Eulogio Del Pino has emphasized a coordinated effort as necessary, not only for the good of Venezuela’s economy, but for other oil-producing nations as well. 

“Our average production cost is less than $10 per barrel and if we go to a price war, it is obvious that the low-cost countries will have certain levels of gains, but we recognize that low-cost producers can’t fill the void in worldwide production of oil,” said Del Pino, who is also president of the state oil company PDVSA.

Early in September, President Maduro met with Russian leader Vladimir Putin in Beijing, who agreed to “several initiatives” to balance the market, Venezuelan state media reported.

However, Kremlin spokesperson Dmitry Peskov said at the time “no concrete steps were taken,” and Russian Energy Minister Alexander Novak said last week that Moscow had rejected Venezuela’s request to cut output. 

The Venezuelan President announced last week forthcoming plans to travel East to lobby for an urgent OPEC summit.

Currently the Head of State is touring the Caribbean, reaffirming political and economic ties in countries such as Trinidad and St. Kitts & Nevis.