Russia-Saudi rapprochement gives positive forecasts for oil prices next year

From economic and political points of view, two fossil fuel giants, Russia and Saudi Arabia, gradually get closer to each other. The partnership between the two countries foreshadows predictable energy prices, which play an important role in the global economy.

As is known, Russia has been alienated globally since the inception of the Ukrainian crisis, which paved the way for fluctuations in energy prices. The cooperation with Saudi Arabia created new opportunities for Russia. Further, Russian President Putin's visit to Saudi Arabia deepened this partnership. During the meeting, the two countries agreed to enhance cooperation in the field of oil and gas. The two sides agreed on the importance of expanding cooperation in oil and gas, such as procurement, supply, and standardisation of equipment, research and development services, and assessment of the use of modern technologies. They commended their close cooperation and the successful efforts of the OPEC+ countries in enhancing the stability of the global oil market.

In addition, they stressed the importance of continuing this cooperation and the need for all participating countries to adhere to the OPEC+ agreement in a way that serves the interests of producers and consumers and supports the growth of the global economy.

The British journalist and expert on energy issues, Neil Watson, in a comment for Azernews, noted that the Russian-Saudi Arabian Alliance actually comes as no surprise, as during the meeting, Saudi Arabia’s Crown Prince Mohammed bin Salman recalled in conversation with Russian President Vladimir Putin that there are historic and strong ties between the two countries, noting that Russia was the first nation to recognise the establishment of the Kingdom in 1926. The Crown Prince went on to describe President Putin as “a special and very dear guest to the Kingdom’s government and people," this being his first visit since 2019 and his second since gaining the Russian Premiership. British journalists were reminded that the Soviet Union, as well as the Russian Federation, forged alliances across the Arab world, and this became stronger following the foundation of the State of Israel at the behest of the UN. The Crown Prince reiterated that both nations share many interests, including energy, agriculture, trade exchange, and investment.

“Saudi Arabia and Russia, holding respectively the second and eighth greatest oil reserves in the world, form part of OPEC+, and throughout 2023, they have played an integral role in driving the attempts of that organisation to stabilise markets. In April, OPEC+ announced production cuts of 1.6 million bpd. In June, Saudi Arabia announced excess voluntary cuts of an additional 1 million bpd. Saudi Arabia was later joined by Russia, which agreed to an additional voluntary cut of 300,000 bpd. Both of these cuts were extended several times and are now in force through the first quarter of 2024. In a December meeting, the ministers added an additional 780,000 voluntary cuts from OPEC+ members for the first quarter of 2024. Today, Alexander Novak, Russian Deputy Prime Minister, predicted that oil prices will average $80-85 a barrel in 2024,” Neil Watson said.

He pointed out that Russia and Saudi Arabia account for 21 percent of world oil reserves, and they have a massive impact on OPEC+, oil prices, and subsequently inflation around the world, which, in turn, impacts internal politics in all countries. The meeting between Russia and Saudi Arabia came at a pivotal juncture.

“Russia wants to demonstrate to the world that it remains relevant as an energy supplier, and thus the situation in Ukraine needs to be resolved, taking into account its stance. The reaffirmation of resolve with Saudi Arabia and other Arab countries ensures that it retains these alliances, which is particularly important during the Israeli-Hamas conflict. Furthermore, Russia retains a strong alliance with Iran, which holds a further 9.5 percent of international resources and ranks in fourth place in the oil reserve rankings. Russia is a dominant force in international energy, and that is set to continue,” the British journalist said in conclusion.