Oil Diplomacy Between Russia and Saudi Arabia - Batuhan Özkan

Russia and Saudi Arabia have importance in world politics and global economy thanks to their geopolitical location, natural resource wealth, and cooperation through membership in different kinds of international institutions and cooperation. Saudia Arabia is known for its sphere of influence in breakpoints of Middle Eastern politics, and Russia becomes prominent in shaping the processes of Syria and Libya. In addition to this, these countries are regarded as two petroleum superpowers, and their decisions are extremely important for the trajectory of energy markets. Finally, G20, OPEC, and Shangai Cooperation Organisation are some forums/alliances/intergovernmental organizations that are actively engaged in the policy-making processes. In this context, bilateral relations, particularly points related to energy issues, between these countries matter and are worth putting under the scope. In this essay, the oil diplomacy of Russia and Saudi Arabia will be examined with reference to two phone calls that have been made between Putin and Mohammed bin Salman in this week.

Before expanding on the telephone conversation that has been held between Putin and Mohammed bin Salman, elaborating and considering the relationship between two countries over energy issues would help us. 2016 is a crucial point in this relationship. Because of this year (sidelines of the G20 Summit), Russia and Saudi Arabia embarked on cooperation in world oil markets, and they agreed on getting to grips with the global glut by limiting the output. In the aftermath of that year, non-OPEC Russia joined the OPEC’s commitment to decrease oil output. In 2017, Mohammed bin Selman stated that they are willing to persuade Russia to accept them as an alternative to Tehran. When we consider the rivalry between Iran and Saudi Arabia over different issues, we can grasp the strategical aspect of this convergence. In consideration of the allyship of Saudi Arabia and the U.S, the promotion of relations with Russia is quite remarkable. 2020 is a year, which is also important because, at the beginning of the year, Russia rejected the OPEC’s request in the direction of reducing oil production. The meaning of this action was the ending of the latent partnership with OPEC. As a response, Saudi Arabia claimed to increase its supply to enlarge its market share. This move led to the Oil Price War, which was one of the most significant events in the oil market in 2020. We witnessed dramatic declines in oil prices due to the oversupply.

This week, two leaders held a phone conversation that they have discussed the conditions of the global oil market and the sustainability of stability that contribute to the growth of the global economy. This is an important development because due to the aforementioned oil price war and COVID-19 process value of the oil plunged, and the consensus on complying with the OPEC+ agreements in reducing oil production can be perceived as a message of recovery. In the first step, until 31 July, it is planned to lowering the production by 9.7 million barrels per day (about %10 of the total supply). Furthermore, it is good to clarify that this conversation has been held after the announcement of OPEC’s estimation about oil demand for 2020 and 2021 (it seems unchanged).

In conclusion, it can be said that developments in the Saudi Arabia-Russia relationship over energy issues give us some messages about the importance of compromise, commitment to the agreements, and international cooperation. OPEC+ should be a group in which countries can be organized under its umbrella and behave harmoniously in favor of global welfare. Although Russia’s action in March 2020 exacerbated the problems that emerged from the COVID-19 crisis, opening the diplomacy channel for the following years is a gladsome situation. Finally, this relationship is a nice example of observing the problems that can be occurred due to the violation of agreements and consensus.

2020 All Rights Reserved