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Russia and Saudi Arabia urge OPEC+ to join oil cuts

December 7, 2023 at 5:02 pm

OPEC headquarters in Vienna [DALIBRI/Wikipedia]

Saudi Arabia and Russia, the world’s two biggest oil exporters, called on Thursday for all OPEC+ members to join an agreement on output cuts for the good of the global economy only days after a fractious meeting of the producers’ organisation, Reuters has reported. Hours after Russian President Vladimir Putin went to Riyadh in a hastily arranged visit to meet Saudi Crown Prince Mohammed Bin Salman, the Kremlin released a joint Russian-Saudi statement about the conclusion of their discussions.

The Organisation of the Petroleum Exporting Countries (OPEC), Russia and other allies agreed last week to new voluntary cuts of about 2.2 million barrels per day (bpd), led by Saudi Arabia and Russia rolling over their voluntary cuts of 1.3 million bpd.

“In the field of energy, the two sides commended the close cooperation between them and the successful efforts of the OPEC+ countries in enhancing the stability of global oil markets,” said the joint statement. “They stressed the importance of continuing this cooperation, and the need for all participating countries to join to the OPEC+ agreement, in a way that serves the interests of producers and consumers and supports the growth of the global economy.”

The Russian version of the statement used the word “join”, while an English translation of the statement, also released by the Kremlin, used the word “adhere” to the OPEC+ agreement.

Saudi state news agency SPA said that Bin Salman and Putin had emphasised in their meeting the need for OPEC+ members to commit to the group’s agreement.

Oil market sources said that such an explicit public remark from the Kremlin and the kingdom about “joining” cuts appeared to be an attempt to send a message to members of OPEC+ who had not cut or not cut their output enough.

The biggest member of OPEC excluded from the cuts is Iran, the economy of which has been under various US sanctions since 1979. Iran is boosting production and hopes to reach an output of 3.6 million bpd by 20 March next year.

Mystery still surrounds Putin’s trip to Riyadh and Abu Dhabi, on which his aircraft was escorted by four Russian fighter jets. It was not immediately clear what particular issue was so important for Putin to make a rare overseas trip.

According to the Kremlin, Putin and Bin Salman also discussed the conflicts in Gaza, Ukraine and Yemen, the Iranian nuclear programme and deepening defence cooperation. The prince has sought to reassert Saudi Arabia as a regional power with less deference to the United States. The kingdom is the biggest purchaser of US arms.

Putin, who sent troops into Ukraine in February 2022, says Russia is engaged in an existential battle with the West and has courted allies across the Middle East, Africa, Latin America and Asia amid Western attempts to isolate Moscow.

The Russian president and the kingdom’s de facto leader, who together control a fifth of the oil pumped each day, were shown smiling and engaging in an effusive handshake as Putin emerged from his car in the Saudi capital. Both men want and need high prices for oil, the lifeblood of their economies. The question for both is how much of the burden each should take on to keep prices aloft, and how to verify the burden.

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