Russia and the Organization of the Petroleum Exporting Countries are on the verge of an unprecedented deal to manipulate global oil prices.
Following a crash in crude oil value, Russian and OPEC leaders reached a short-term agreement in January 2017 to curb production. Now Russia and OPEC members, with Saudi Arabia leading them, are looking to keep their alliance going for decades to come.
“We are working to shift from a year-to-year agreement to a 10 to 20 year agreement,” Saudi Crown Prince Mohammed bin Salman said to Reuters on March 26. “We have agreement on the big picture but not yet on the detail.”
Russia is not an official member of OPEC, but cooperation between the Kremlin and member states during oil price drops is typical. However, a deal of this scale would be unparalleled. Beyond a possible 20-year agreement, they are even looking to extend their partnership “indefinitely.”
“This could be an indefinite agreement,” Russian Energy Minister Alexander Novak explained. Novak also expressed a desire to see a joint organization formation between his country and the 14-member oil group to better manipulate the market. “In essence, this could be some international organisation, which could gather once every half a year and discuss the situation on the oil market; both OPEC and non-OPEC countries,” the Energy Minister added.
Russia began working with OPEC after oil prices plummeted from $100 a barrel in 2014 to $30 in 2016. Amid the drop in price, Saudi Arabia recruited the Kremlin, along with other non-OPEC nations, to help curb oversupply.
A major concern for OPEC and Russia has been skyrocketing production within the United States, which is experiencing a shale oil boom. The U.S. is on track to become the world’s largest oil producer by 2023, the International Energy, a top industry monitor, reported on March 5.
If it reaches fruition, such a deal between Russia and OPEC would also further cement President Vladimir Putin’s influence in the Middle East.
King Salman made history in 2017 when he became the first Saudi monarch to visit Russia in October. His government has provided investment and support to a Russian economy currently in tatters from Western sanctions.
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