Russian Federation and Saudi Arabia backed by OPEC are planning a long-term oil deal
Sawako Uchida and Lee Jay Walker
Modern Tokyo Times
The Russian Federation and Saudi Arabia hope to finalize a deal, with the blessing of OPEC (Organization of Petroleum Exporting Countries), which will benefit all concerned for the next decade or possibly two decades. If so, then both nations – and all OPEC members – can plan long-term policies that will strengthen all respective parties. At the same time, economic and political developments between the Russian Federation and Saudi Arabia should strengthen naturally.
Currently, the Russian Federation and OPEC members continue to sign important oil agreements yearly. Yet, it is clear that political elites in Moscow and Riyadh seek greater cooperation, in order to control market volatility to a greater degree.
Mohammed Barkindo, the Secretary General of OPEC, said, “We are looking for a very long-term cooperation between OPEC and non-OPEC producing countries.”
Crown Prince Mohammed bin Salman of Saudi Arabia is known to have grand plans to alter many aspects of society in this nation. At the same time, the Crown Prince is focused on important geopolitical issues and altering the economic and cultural landscape of Saudi Arabia. Therefore, it makes sense for Saudi Arabia to work closely with the Russian Federation in relation to important energy issues.
The Crown Prince told Reuters, “We are working to shift from a year-to-year agreement to a 10 to 20 year agreement.”
Reuters reports, “Top OPEC producer Saudi Arabia recruited Russia and other non-OPEC countries to help drain oversupply when oil prices collapsed to below $30 a barrel in 2016 from over $100 in 2014.”
Of course, while the prime focus is the need to stem oversupply and to protect the price of oil, other issues for the Russian Federation will also gain. For example, the Russian Federation will increase its geopolitical clout throughout the Middle East and within all OPEC member nations. Hence, from an international point of view, it appears to be a win-win situation for the Russian Federation and Saudi Arabia respectively.
Newsweek reports, “Russia, the world’s largest oil producer, is not a member of OPEC, an alliance that includes other oil-producing countries such as Venezuela, Iraq, Iran, and Angola. But it does get involved in OPEC negotiations when it believes that it could be beneficial. A deal spanning over a decade, however, would be unprecedented.”
Interestingly, while geopolitical differences exist between the Russian Federation and Saudi Arabia, this notably applies to the different approaches being taken towards Iran and Syria. In the opposite direction, ties between the Russian Federation and Saudi Arabia are strengthening. Therefore, if plans come into place both nations – and OPEC in general – will gain.
Modern Tokyo News is part of the Modern Tokyo Times group
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