London (Platts)--19Jun2015/854 am EDT/1254 GMT

* Saudi oil minister 'optimistic' about future market
* Says alliance with Russia to help stabilize market
* Riyadh, Moscow also sign nuclear, military deals


Saudi Arabia's oil minister Ali Naimi is confident that oil prices will rise in the coming months given the increase in global demand and the low level of commercial stocks.

Naimi, cited by Saudi state news agency SPA late Thursday in St Petersburg, also said a cooperation alliance agreed with Russia earlier in the day would be for the benefit of the stability of the international oil market.

Naimi was part of a Saudi delegation in Russia, which included Saudi deputy crown prince and defense minister, Mohammad bin Salman al Saud, that signed a number of cooperation agreements between Riyadh and Moscow, including in the nuclear and military spheres.

Speaking about the oil market, Naimi was quoted by SPA as saying: "I am optimistic about the future of the market in the coming months in terms of the continuing improvement and increasing global demand for oil as well as the low level of commercial inventories."

This, he said, "is expected to improve the level of prices."

Naimi also welcomed the increased level of cooperation with Russia, saying Riyadh would work to push the collaboration both at the bilateral level and international level.

"This, in turn, will lead to creating a petroleum alliance between the two countries for the benefit of the international oil market as well as producing countries and stabilizing and improving the market," he said.

SIGNIFICANCE OF RELATIONS

Naimi and Prince Mohammad also met with Russia's President Vladimir Putin, which "reaffirms the significance" of relations between the two countries, SPA reported.

The meeting addressed means of enhancing bilateral relations, particularly in the fields of peaceful use of nuclear energy, military and technical cooperation, housing, the oil and gas sector and investment opportunities.

An agreement was signed on cooperation in the field of "peaceful use" of nuclear energy, which aims to "promote and strengthen the relationship between the two countries to the best interest of both sides, both economically and technically," SPA reported.

WORKING GROUP

As part of the enhanced relations in the oil and gas sector, Riyadh and Moscow agreed to set up a working group to assess future joint projects.

"We have agreed to set up a working group that would consider concrete projects that will allow [us] to expand our cooperation," Novak said after the signing ceremony Thursday, Platts reported earlier.

Novak said he had seen an interest from Saudi companies to take part in energy projects in Russia, while Russian companies are also interested in taking part in projects in Saudi Arabia.

There are no concrete projects currently, however, he said.

Between them, Russia and Saudi Arabia are producing in excess of 21 million b/d of oil -- more than one-fifth of the world's total.

Russia's output reached a post-Soviet record high of 10.71 million b/d in May, while Saudi Arabian production was estimated at 10.3 million b/d last month.

A reluctance on both sides to reduce oil production as part of some kind of OPEC/non-OPEC pact in November last year was thought to have been a factor in OPEC's decision to roll over its 30 million b/d production target.

Senior Russian officials backed OPEC's decision to maintain its production ceiling at the end of 2014, with Novak saying earlier this month it was the dynamics of supply and demand that would balance the world market.

--Stuart Elliott, stuart.elliott@platts.com
--Edited by Maurice Geller, maurice.geller@platts.com

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