During the past six years, Russia and Saudi Arabia have worked together to control the global oil market, even during times of war, pandemic, and price fluctuations. However, their alliance seems to be straining, which could benefit the Biden administration. The administration was eager to prevent another significant increase in energy prices before Secretary of State Antony J. Blinken’s visit to Saudi Arabia this week.
At the recent OPEC Plus meeting, Saudi Arabia and Russia quietly parted ways. Saudi Arabia announced that it would reduce its exports by one million barrels of oil per day to support falling prices, but Russia did not make any new commitments to reduce its exports.
This is the second time the partners have diverged on oil policy. Two months ago, Russia and Saudi Arabia, which together sell more than 20% of the world’s oil, agreed to cut production. While Saudi Arabia followed through and sold less oil to other countries, Russia does not appear to have done so. Moscow has stopped disclosing information on its oil industry, but analysts estimate that it has increased exports, undermining the earlier deal.
The Saudi-Russian oil alliance has always been about propping up oil prices and maximizing export revenue. However, Russia’s war in Ukraine has changed the dynamics of the relationship. Russia is increasingly willing to accept lower prices to sell more oil, much of it going to China and India, to fund its war effort.
Russia’s pressing needs, along with weak global demand for oil, have helped drive prices lower. This has helped bring down energy prices worldwide, including in the United States, where President Biden made reducing gasoline prices a central policy goal after the war in Ukraine began last year.
As of Wednesday afternoon, the US benchmark oil price was less than $73 a barrel, about the same as before the OPEC Plus meeting, and down from $120 last summer.
“The goals of Russia and the cartel are diverging,” said Mikhail Krutikhin, a veteran Russian oil expert based in Oslo. “There is no trust in Russia’s data, and there is no trust in Russia’s actions.”
Saudi officials have not publicly criticized Moscow, appearing to help President Vladimir V. Putin out of a corner to preserve a partnership that started in 2016 and has been generally profitable to both sides.
Bruce Riedel, a former Middle East analyst at the Central Intelligence Agency, disagreed with the idea that Saudi-Russian relations were strained. He said that by unilaterally cutting oil production, Saudi Arabia was distancing itself from the United States, and specifically the Biden administration.
“The Saudis have tilted decisively toward Russia by cutting oil production to raise prices,” said Mr. Riedel, now at the Brookings Institution. “The timing, on…
2023-06-07 14:39:11
Original from www.nytimes.com
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