Only two years ago, Saudi Arabia and Russia's disagreement in terms of the oil market's reaction to the COVID19 pandemic had caused what was known as the Saudi-Russian oil war of March 2020, which ended when Saudi, a leading member of the OPEC group, and Russia reached an agreement that still governs their oil cooperation to this very day.
Today, the world faces another crisis following the Russian military invasion of Ukraine on the 24th of February 2022, sending oil prices sky-high to over $100 USD a barrel, and raising fears of aggravated inflation causing another global recession.
Russian President Vladimir Putin and Saudi Crown Prince Mohammed bin Salman spoke on Saturday and the two were “positive” about their cooperation on OPEC+, according to the Kremlin. https://t.co/2hjKakLDzC
— Bloomberg Energy (@BloombergNRG) April 17, 2022
However, western pleas for OPEC+ to increase daily outputs hoping to stabilize prices and consequently markets have been largely dismissed by the petroleum exporting group, particularly Saudi Arabia, whose economy is still largely oil-reliant and who does not wish to change the roles of the OPEC+ agreement signed with Russia in the spring of 2020.
In response to OPEC's non-changing policies, the US and its allies, including Japan, Australia, and South Korea have been working closely to increase their output using their strategic reserves, bringing oil prices significantly lower, but not low enough to spare the global economy the repercussions of a potential recession.
Knowing this, it comes as no surprise to see several phone calls exchanged between the Crown Prince of Saudi Arabia Mohammad bin Salman and the Russian President Vladimir Putin, stressing their "positive assessment of OPEC+ cooperation".
While Saudi Arabia has been avoiding taking sides during the war in Ukraine, expressing support for political solutions between both sides, the Saudis and other main oil exporters in the region are sure looking forward to making the best out of the current oil prices, hoping to generate more investments in the oil industry so they can achieve faster economic recovery after the COVID19 pandemic.
Written by Riham Darwish
