Russia and Saudi Arabia united their dominance on the oil market in 2016 to become OPEC+. However, this is not the start of their collaboration. Additionally, they have clashed as competitors. In the end, only the price of oil aligns with their interests. Two ambitious princes met in February 2015 in Abu Dhabi at the Idex arms expo. One was Saudi Arabia’s Minister of Defence and deputy crown prince Mohamed bin Salman. The other was Mohammed bin Zayed al-Nahyan, Abu-Dhabi’s de facto ruler and the city’s crown prince. The two, MBS and MBZ, talked about palace intrigue. MBS was jealous of Mohammed bin Nayef, his older cousin who served as interior minister and crown prince. Furthermore, after 9/11, bin Nayef was credited with destroying al-Qaida cells in Saudi Arabia as the country’s counterterrorism czar. He, therefore, had positive working relationships with Americans. MBS wanted to surpass Bin Nayef but was unsure how to go. MBZ advised him to think more deeply.
MBZ advised him to develop new relationships with China and Russia and to think more imaginatively about Saudi foreign policy. Russia joined the OPEC+ forum at the end of 2016 and started coordinating its oil production with that of the leading group. MBS finally landed in St. Petersburg four months later. MBS met with Putin for a long time in Moscow on that trip, and the Saudi and Russian energy ministries also inked a memorandum of understanding for future collaboration. A year later, the two met again during the G20 conference in Hangzhou, China, in September 2016 to discuss how their nations could cooperate to stabilize oil prices. Both parties desired to forge a deeper connection that would address the regional saving of the Syrian government of Assad. However, the Russian-Saudi alliance was going to be based on oil. The two leaders instructed their energy ministers to cross their ts and dot theirs.
History Before OPEC Summit
Russia joined the OPEC+ forum at the end of 2016 and started coordinating its oil production with that of the leading group. A background of conflict The MBS-Putin collaboration, however, is not a recent development. Saudi Arabia has a three-decade track record of being willing to engage with Russia whenever oil markets demand it. The critical thing to realize in this situation is that the Saud family’s survival depends on their ability to control oil prices. The kingdom has used oil income to bribe citizens, distribute social benefits, and fund significant infrastructural projects. Important: The last one. The population is changing, which is putting pressure on Saudi Arabia. As a result, it must speed up economic expansion to generate more jobs for an expanding population. For all of these reasons, the Saudi government considers it essential to keep the price of oil high on the global market. OPEC, which the kingdom dominates, is the cartel of oil producers and its most excellent option for accomplishing this. In actuality, Saudi Arabia was compelled to establish that forum in the first place due to its commercial rivalry with the Soviet Union. The Soviet Union has been absent from the energy market since the end of World War II and returned in the later 1950s. American publications called it a “Soviet oil offensive.” The Soviet Union offered its oil at lower prices than everyone else to gain a foothold in a crowded market. Because of the pressure this put on oil prices, nations like Saudi Arabia agreed to establish OPEC in 1960. The Soviet Union was a geostrategic adversary during that time. It provided weapons and military instruction to Egypt and Syria, two of Saudi Arabia’s adversaries in the Arab world. In retaliation, Riyadh supported Moscow’s foes in the Red Sea region in the 1970s. Most notably, Saudi Arabia supported the Afghan mujahedeen, an Islamic resistance group that battled the Soviet invasion of their nation.
Saudi Arabia’s Effort for Russian Collaboration
Despite their history of animosity, Riyadh never hesitated to ask the Soviet Union for assistance. In 1983 (when Riyadh still supported the military opposition in Afghanistan), the Saudis sent the Soviet Union their first invitation to join OPEC. The Saudi appeal was made because oil prices have been falling since 1982. OPEC could not reverse that trend because its members were losing market share. The terms of the game were altered by the entry of new producers who were not OPEC members, such as Mexico and the UK. At the time, the Soviet Union was one of the world’s top oil producers. In that case, inviting it to OPEC made it logical.
The Soviet Union repeated this action in 1989, reducing production by 5%. Saudi Arabia was able to stop the decline in oil prices in part due to Soviet support. The cost of a barrel did, in fact, quadruple between 1986 and 1988. To make it easier for Moscow to join OPEC, the Saudis, and the Soviets established a joint working committee. However, it didn’t happen like that. The Saudis believed that Gorbachev was unable to proceed due to political opposition. In any event, neither nation had a lot of runways. The Soviet Union had disintegrated by 1991.
Saudi Arabia had little time for Russia in the 1990s as the nation’s oil output fell from 11 million barrels per day (MBD) to roughly 6 MBD. But by 1998, Saudi Arabia required Russia’s assistance once more. Oil demand fell globally as the 1997 Asian financial crisis affected global markets, and prices followed suit. Ali al-Naimi, the Saudi Arabian oil minister, traveled to Moscow that year to request that the Russians reduce their output by 100,000 barrels daily. The Russians committed but never kept it.
A Feud After G8 Summit
During a G8 summit the following year, the Russian government broke its pledge to the Saudis. Saudi Arabians were enraged. They had the sense that Russian President Boris Yeltsin was trying to convince the Americans that his nation was a more dependable source of oil than OPEC. Yeltsin received access to G8 meetings in exchange, although the size of the Russian economy did not call for it. Riyadh returned to its preferred game of supporting an Islamic uprising against Russian control, this time in Chechnya. Through 2003, tensions between Moscow and Riyadh persisted. The American invasion of Iraq that year displeased the Russian government.
Vladimir Putin, the head of Russia. Saddam’s demise harmed Russia’s business interests because Iraq was a significant trading partner. Putin then made a concerted effort to normalize his relations with Saudi Arabia. This brings us full circle to the beginning of the tale. In 2015, MBS’s tilt towards Moscow was motivated by more than just palace politics. Since 2010, OPEC has struggled to control oil prices due to the advent of a new exporter, particularly the United States. The US is now a net exporter due to the shale revolution. Without working together with the Russians, OPEC would not have been able to counteract the US’s expanding market dominance, and Putin was more than willing to go along for the ride. A barrel of oil costs a lot to produce. Therefore due to the high cost of extracting a barrel of oil in Siberia’s severe climate, high prices benefit Russia, which aligns with Saudi objectives.