Following a very stretched period of low Crude Oil price worldwide, Russia + OPEC, which is half of the world’s Oil producers combined, had decided in April this year to freeze their oil output to increase and balance the international oil prices, and had given an exemption to Iran to let the country come out of the sanctioned era of low oil output.
The deal was almost being signed when the young Saudi Prince Mohammed bin Salman refused cooperation and pulled out, insisting that Iran should also be included in the Oil Output Freeze deal. “Our Saudi partners at the last moment changed their view,” said Putin. “We didn’t reject the idea of freezing output. Our position hasn’t changed.”, further saying that “It will be unfair to leave Iran (at this stage),”
In an interview in Vladivostok, Putin said, “From the viewpoint of economic sense and logic, then it would be correct to find some sort of compromise,” adding, “I am confident that everyone understands that. We believe that this is the right decision for world energy.”
While other countries understand that Iran, just freed from sanctions, should be allowed to increase output, Saudi Arabia remains stubborn over the issue and insists that Iran must halt production as well. The Russian leader says he will talk on the issue when he meets Saudi Prince in the G20 summit within the next few days, saying, “I would very much like to hope that every participant of this market that’s interested in maintaining stable and fair global energy prices will in the end make the necessary decision.”
Prince bin Salman “is a very reliable partner with whom you can reach agreements, and can be certain that those agreements will be honoured,” he added.
Being the world’s largest energy exporter, Russia is dependent on oil and natural gas for about 40% of its revenues as crude remains less than $50/Barrel.
While Russia needs to do all it can do to increase oil prices, Saudi’s regional rivalry with Iran and its all-time friendship with the US causes it to closely follow US’s advice in such matters, which particularly in this case benefits US as it leaves Russia in a dossier over the issue.