Saudi Arabia and Russia are working together to reduce oil production and save the oil market. This is not a one-time expedient measure. Sand Kings Reserve revealed that the two countries are discussing a long-term alliance for 10 to 20 years to stabilize the oil market and avoid drastic fluctuations in oil prices.
Reuters and Financial Times reported that in 2016, the price of oil plunged and broke through the 30-dollar mark per barrel; to save the oil market, Russia and the Organization of Petroleum Exporting Countries (OPEC) led by Saudi Arabia jointly reduced production from January 2017.
On the 26th, Shah’s Crown Prince Mohammed bin Salman said that Saudi Arabia and Russia are discussing and hope that the annual agreement can become a 10 to 20-year agreement. The two countries have reached consensus in the general direction, but the details are still open to question.
In the past, when crude oil was oversupplied, Russia had also cooperated with OPEC to stabilize the market, but it had never established a long-term cooperation relationship with OPEC for 10 to 20 years. Daniel Yergin, vice president of IHS Markit, said that the key point is that the alliance between the two sides is a short-term emergency strategy, and it only wants to solve the immediate crisis; or the global oil market order is about to be reorganized. OPEC hopes to institutionalize the relationship between the two parties, not a one-time cooperation. Experts pointed out that Saudi Arabia hopes that the long-term cooperation between the two countries can regulate the supply of crude oil, ending the ups and downs of oil prices.
Helima Croft of RBC Capital Markets pointed out that the long-term cooperation between Russia and Saudi Arabia is an important development. First of all, this news came from the mouth of the King Shah, and he and Russian President Putin are the final decision makers of the crude oil policy of the two countries. In the meantime, Saudi Arabia was originally a faithful ally of the United States. Today, Tsarist Russia’s relations are getting more and more heated, and Sand King’s reserve and Putin seem to be on a par with each other, making the cooperation between the two sides closer.
On the 27th, West Texas Intermediate crude oil futures fell 0.5% to US$65.25 per barrel. Brent crude oil fell 0.01% to $70.11.