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Venezuela, Saudi leaders meet and talk oil prices in Riyadh

Published:Monday | January 12, 2015 | 12:00 AM

RIYADH, Saudi Arabia (AP):

Venezuelan President Nicolas Maduro met yesterday with Saudi Arabia's Crown Prince Salman, a day after talks with Iran's supreme leader focused on the slump in global oil prices.

The official Saudi Press Agency reported that the leaders discussed areas of cooperation between the two OPEC-member countries and ways to promote bilateral ties. The brief statement did not elaborate, though it said Saudi Oil Minister Ali Naimi and Venezuelan Oil Minister Asdrubal Chavez were also at the meeting.

Oil prices have plunged more than 55 per cent since June to less than $50 a barrel, placing

a severe strain on Venezuela and other oil-producing countries like Iran. Saudi Arabia has strong financial reserves to weather lower oil prices, but Venezuela's cash-strapped government is among the cartel's most vulnerable. Analysts estimate that Venezuela needs oil at $110 per barrel to continue meeting its budgetary obligations.

Saudi Arabia, OPEC's largest oil producer, has refused to cut production despite willingness to do so by Venezuela and others. Saudi Arabia's oil minister has argued that curbing production would erode the kingdom's market share and would have no impact on oil prices.

A recent Bank of America Merrill Lynch Global Research report said physical oil supply is still outpacing demand, setting the stage for a further slide in prices in the first quarter of 2015. The report said there is a growing risk of US crude prices moving below $35 a barrel in the near term and Brent crude to $40 a barrel.