The recent meeting of the oil cartel OPEC Plus saw a quiet divergence between Saudi Arabia and Russia, two countries that have been working together for the past six years to control the global oil market. While Saudi Arabia announced it would reduce its exports by a million barrels of oil per day to support falling prices, Russia made no such commitment. This is the second time the two countries have diverged recently on oil policy, with Russia not following through on a previous agreement to cut production. The strain in their partnership could benefit the US, which is eager to prevent another surge in energy prices.
The Russia-Saudi oil alliance has traditionally been about maximizing export revenue and propping up oil prices. However, Russia’s war in Ukraine has changed the dynamics of the relationship, with the country willing to accept lower prices to sell more oil, particularly to China and India, to fund its war efforts. This, along with weak global demand for oil, has helped to drive oil prices lower. The timing of Saudi Arabia’s reduction in oil production just before Secretary of State Antony J. Blinken’s visit has raised eyebrows, as it appears to distance Saudi Arabia from the United States, while tilting towards Russia.
Former Middle East analyst at the Central Intelligence Agency, Bruce Riedel, has stated that Saudi Arabia’s reduction in oil production was a message to the Biden administration and that, from his perspective, Saudi-Russian relations are not strained. Robert Jordan, a former U.S. ambassador to Saudi Arabia, believes there are benefits for both countries to stabilize their relationship.
Despite the recent tensions, energy analysts predict that the Russia-Saudi partnership will continue, as both countries still need each other. The two countries have seen much in common, including their opposition to some US policies, such as price-capping on Russian oil exports, which Saudi Arabia views as a threat to its profits.
While Russia’s oil and gas revenues, the largest contributor to its budget, dropped dramatically in the first five months of 2022, Saudi Arabia’s Kingdom Holding Company invested hundreds of millions of dollars in Russian energy companies, and they ramped up imports of Russian fuel oil for their power plants while other countries restricted or ended purchases of Russian energy. Saudi Arabia and its allies need Russia to stay on board, but some officials are already complaining about Russia’s reliability as a partner, as it has not disclosed its energy production data since April.
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