Futile or dangerous? Saudi Arabi attempts to seduce Russia with lucrative oil and gas deal

Published August 27th, 2013 - 10:31 GMT
The Putin-Bandar meeting was injected with threats of a “dramatic turn of events” in Syria (Photo Credit: Getty images).
The Putin-Bandar meeting was injected with threats of a “dramatic turn of events” in Syria (Photo Credit: Getty images).

After attempting  the same with an arms deal, Saudi Arabia is now reportedly resorting to the perhaps the only more irresistible resource than weaponry- oil. This comes as a strategic offer given that Saudi Arabia has dethroned Russia as the world's biggest exporter. 

Syrian opposition sources close to Saudi Arabia said Prince Bandar, head of Saudi intelligence, allegedly offered to buy up to USD 15 billion of Russian weapons as well as ensuring that Persian Gulf gas would not challenge Russia's gas sales to Europe.

Prince Bandar, head of Saudi intelligence, allegedly approached the Kremlin with a mix of carrot-and-stick approach coupled with a package of economic incentives. “Let us examine how to put together a unified Russian-Saudi strategy on the subject of oil. The aim is to agree on the price of oil and production quantities that keep the price stable in global oil markets,” he said at the four-hour meeting with Mr Putin. They met at Mr Putin’s dacha outside Moscow three weeks ago.

The talks appear to offer an alliance between the OPEC cartel and Russia, which together produce over 40m barrels a day of oil, 45pc of global output. Such a move would alter the global economic landscape. 

"Bandar offered to intensify energy, military and economic cooperation with Moscow," a senior Syrian opposition figure also told Reuters.

A dangerous move?

Saudi Arabia could help boost oil prices by restricting its own supply. This would be a shot in the arm for Russia, which is near recession and relies on an oil price near $100 to fund the budget.

But it would be a dangerous strategy for the Saudis if it pushed prices to levels that would endanger the the world’s already fragile economic recovery. Crude oil stocks in the US have already fallen drastically this year, and according to Goldman Sachs, the “surplus cushion” in global stocks built up since 2008 has already been eliminated.

A futile move?

The Putin-Bandar meeting was injected with threats of a “dramatic turn of events” in Syria. Nonetheless, other sources report that  Mr Putin remained blasé to the seemingly irresistible Saudi offer. “Our stance on Assad will never change. We believe that the Syrian regime is the best speaker on behalf of the Syrian people, and not those liver eaters,” he said, referring to footage showing a Jihadist rebel eating the heart and liver of a Syrian soldier.

 A Western diplomat told Reuters that Russia’s position was more a matter of prestige and geopolitics, and that the country was unlikely to publicly back down for the sake of mere economic incentives.

The last memorable time Saudi Arabia tried took part in using its oil-prowess to influence foreign policies was the 1973 OAPEC oil embargo, resulting into what came to be famously known as the enduring 1973 Oil Crisis. 

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