MOSCOW- Saudi Arabia, other members of OPEC and Russia are to be admired for trying to prevent a spike in global oil prices, U.S. Energy Secretary Rick Perry said after meeting Russian Energy Minister Alexander Novak in Moscow.
U.S. sanctions on Iran’s oil exports, whichcome into force in November, have already cut supply back to two-year lows, while falling Venezuelan output and unplanned outages elsewhere will also keep the supply-demand balance tight, the International Energy Agency said on Thursday.
“The kingdom (Saudi Arabia), the members of OPEC that are opting their production to be able to make sure that the citizenry of the world does not see a spike in oil price … are to be admired and appreciated, and Russia is one of them,” Perry told reporters.
The United States, Russia and Saudi Arabia are also working together to make sure the world has access to affordable energy, he added.
Oil prices fell on Thursday, slipping back from four-month highs as investors focused on the risk that emerging market crises and trade disputes could dent demand even as supply tightens.
Russia’s Novak said earlier this week that his country could raise output if needed and warned of uncertainty on the market due to the upcoming U.S. sanctions against Iran’s oil exports.
In September, the Middle East-dominated Organisation of the Petroleum Exporting Countries and a group of non-OPEC producers, including Russia, will meet in Algeria to discuss the market situation.
During the meeting with Perry, Novak said he proposed creating a joint investment fund to develop new projects, adding the Russian Direct Investment Fund (RDIF) could be part of such a fund.
The RDIF supports this idea and will propose possible parameters for such an arrangement soon, it said in a statement.
Perry and Novak also touched on the topic of gas pipeline project Nord Stream 2, that would double Russia’s export capacity via the Baltic Sea. In July, Washington repeated a warning to Western firms invested in the pipeline that they were at risk of sanctions, saying Moscow was using the project to divide Europe.
Perry, who also met with Russian Deputy Prime Minister and Minister of Finance Anton Siluanov, told the officials that the Trump administration opposes Nord Stream 2 because it would concentrate a single route of Russian gas into Europe, “one vulnerable to disruption and risks of over reliance for European customers,” his spokeswoman, Shaylyn Hynes said.
The United States is boosting its own gas exports to Europe, including to Poland and Lithuania, through liquefied natural gas, or LNG shipments. LNG is more expensive for Europe than gas pipelined from Russia, but Washington is emphasizing the reliability of U.S. LNG.
Russian state energycompany Gazprom has in the past cut off gas to Ukraine, and onward to Western Europe, during price disputes in deep winter, and imposed bans on customers reselling gas to other countries.
Perry told the Russian officials that the Trump administration welcomescompetition on energy from Russia, but “Moscow can no longer use energy as an economic weapon,” Hynes said.
Novak said Nord Stream 2 was a “commercial project”, which Russia hoped would continue to be developed and that the United States would approach rationally.
Perry did not rule out the introduction of sanctions against Nord Stream 2, but said neither leaders of the two countries, nor their energy ministers, wanted to get to the point where sanctions against the project would be engaged.