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Russia and Saudi Arabia will continue co-operating in the long term, including on the design of a framework for the relations between OPEC and its external partners, a Russian Energy Ministry statement said.
The statement was released following a meeting between Alexander Novak and Khalid al-Falih that took place on Saturday, two days after Novak hosted U.S. Secretary of Energy Rick Perry to discuss oil markets and Russia’s contribution to global production ahead of the Iran sanctions.
The meeting with Al-Falih provided little in the way of surprises: the two officials once again reiterated their common intention to make sure there is enough oil on the global market and their preparedness to “respond to any changes in the market situation so that market balance is kept.” In non-official speak, this preparedness is effectively a declaration that OPEC and Russia will adjust their production to keep prices where they want them or at least closer to where they want them than it would be possible if each acted on their own.
Washington has approached both Russia and Saudi Arabia as two of the world’s top three producers to help offset a decline in global oil supply after the sanctions kick in. This intervention is looking increasingly necessary as Iranian officials begin to allow for the possibility of Iran’s oil exports being reduced to zero later this year.
Meanwhile, Washington must balance between keeping a lid on prices at the pump and maintaining its hostile stance in relations with Russia. As tough as this job may seem, it may be working for the moment despite the recent imposition of more U.S. sanctions against Moscow.
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“The kingdom (Saudi Arabia), the members of OPEC that are opting their production to be able to make sure that the citizenry of the world does not see a spike in oil price ... are to be admired and appreciated, and Russia is one of them,” Perry said after his meeting with Novak last week.
While this could be seen as the closest to an olive branch as the United States would be prepared to give Russia, Moscow’s long-term ally Iran is becoming disgruntled by these developments. This weekend, Iran’s OPEC governor accused Moscow of trying to take advantage of Iran’s sanction woes to eat into its oil market share.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.