News - World: Saudi Arabia has indicated to western allies that it is prepared to raise oil production should Russia’s output fall substantially under the weight of sanctions, according to five people familiar with the discussions.

People familiar with the talks said Saudi Arabia had agreed to a shift in tone to try to calm prices as part of a rapprochement with Joe Biden’s administration. It has also offered reassurances that it would eventually respond by raising production should a supply crunch hit the oil market.

“Such steps are in the realm of the possible in response to materially positive movement on the US side,” said Ali Shihabi, a Saudi commentator familiar with the leadership’s thinking, referring to efforts to smooth relations ahead of a possible visit by President Biden this year.

One diplomatic source said there had been discussions about an immediate increase in production from Saudi Arabia and the United Arab Emirates, which could be announced at Thursday’s Opec+ meeting. But nothing has yet been finalised, and Opec+ could still stick with its production plan that has been in place since the beginning of the Covid crisis.

The kingdom has resisted calls from the White House to accelerate production increases despite oil prices trading near $120 a barrel, the highest level in a decade, arguing that the energy crunch could get significantly worse this year. Saudi Arabia believes it needs to keep spare production capacity in reserve.

But fears of outright supply shortages have risen after the EU launched another round of sanctions against Moscow, including a ban on importing seaborne cargoes of Russian oil into the bloc.

The EU has also agreed a deal with the UK to bar the insurance of ships carrying Russian oil later this year, a move analysts said was likely to severely curtail Moscow’s ability to redirect oil to other regions. “Saudi Arabia is aware of the risks and that it is not in their interests to lose control of oil prices,” said one person briefed on the kingdom’s thinking.

Oil prices fell on Thursday, dropping to a low of $112.80 a barrel in early trading from $116.29 at the close on Wednesday. Prices hit a two-month high above $120 a barrel this week.

Source: Agencies