Even though the Saudi National Team suffered a major defeat during the World Cup in Russia, Moscow and Riyadh are now involved in a different kind of “game”: developing mutually beneficial mechanisms to control global oil markets, according to a Russian analyst.
Earlier, Russian Energy Minister Aleksandr Novak announced that Moscow and Riyadh have agreed to jointly support the expansion of the OPEC + agreement to contain global oil production as well as discuss the principles for a greater framework of cooperation between OPEC and states that are not members of the organization.
Russia and Saudi Arabia have effectively taken responsibility for the stability of the global oil market by drawing up an agreement that could pave the way for a new world oil market and oil price regulation mechanisms, according to Russian analyst Dmitry Lekuh .
According to official reports quoted by Lekuh, Moscow and Riyadh intend to “support oil and natural gas as key elements of the global energy balance.”
“This means that the conciliatory efforts of the mainly Saudi-controlled OPEC oil cartel and the Russia-led group of independent oil producing countries have proved their effectiveness in coordinated actions in global markets … The mechanism of this global control is working, there is no reason to change it or to get rid of it, even though things have finally stabilized,” said the analyst.
He noted that Russia and Saudi Arabia intend to offer the other oil producing countries – including Canada, Mexico, Kazakhstan and the US – the opportunity to join the global agreement to contain oil production.
“Of course, no one will force them to participate. It is worth mentioning, however, that the combined oil production capacity of Riyadh and Moscow is sufficient to regulate global markets not only for common interests but also for their own,” Lekuh said, noting that” under certain circumstances “oil prices may not only rise.
According to the expert, extension could make this “powerful organization with a more formalized coordination center” handle the market more efficiently and affect oil and natural gas prices.
Lekuh also added that Moscow and Riyadh are not comfortable with speculation about “paper oil” on the stock exchanges, and the two countries are likely to come together with other oil-producing countries.
“It is not clear how this will be done exactly as Saudi Arabia and Russia have so far only ‘agreed to take the next step.'” But the important thing is that they have declared their willingness to ‘accept responsibility for the stability of markets’,”Lekuh pointed out.