Saudi Arabia and Russia draw closer amid OPEC upheaval
As Saudi Arabia and Russia deepen cooperation, their combined influence over global oil supply is growing. Could this shift the balance of power in energy
As Saudi Arabia and Russia deepen cooperation, their combined influence over global oil supply is growing. Could this shift the balance of power in energy markets? Russia and Saudi Arabia each produce between 9-10 million barrels of oil a day. Together, they account for over 20% of total world oil production. This gives them significant control over supply, despite Western sanctions and price caps on Russian oil following the war in Ukraine, and disruptions caused by the Strait of Hormuz blockade. OPEC minus one important member As the biggest member of the Organization of the Petroleum Exporting Countries (OPEC), Saudi Arabia has long dominated the formal alliance and worked to keep oil prices stable by controlling supply. Before the war in Iran started, OPEC countries — Iran is a member — produced over 35% of the world's crude oil and have nearly 80% of the world's proven oil reserves. Still, over the years, the group's power has waned because of internal divisions and the massive rise of US shale oil production. In April, the United Arab Emirates (UAE), then OPEC's third-largest producer, announced it would leave the group on May 1 after nearly six decades, reducing OPEC's membership to 11 countries. The oil-rich country, which has significant spare capacity and was unhappy about quotas, can ramp up production as soon as the Strait of Hormuz opens. Seeking alliances to stay relevant It is not the first time a member has left — or rejoined — OPEC, but the UAE offered production flexibility and its exit will weaken the cartel's pricing power in the long run.
Perhaps in anticipation of this, Saudi Arabia has been drawing closer to Russia, which is not an OPEC member. The two countries are doing this directly and through the more informal alliance called OPEC+, which consists of OPEC-members and additional oil producing countries, and was created in 2016. Putin's Beijing visit shows Russia's reliance on China To view this video please enable JavaScript, and consider upgrading to a web browser that supports HTML5 video But currently, it is Russia and other non-Gulf petroleum exporters who are benefiting, as Iran effectively blocks the Strait of Hormuz, says Mark N. Katz, a nonresident senior fellow at the Atlantic Council, a think tank based in Washington, D.C. "Western and other buyers have been willing to increase their purchases of sanctioned Russian oil in order to prevent a dramatic oil price rise, which would hurt their domestic economies," said Katz, who has been following Moscow's relations with the Middle East since the early 1980s. The St. Petersburg Economic Forum Among industry analysts and political observers, it has not gone unnoticed that the pair is working more closely than ever. In the past two years, the countries' energy ministers have repeatedly coordinated on oil output. Russian President Vladimir Putin visited Riyadh in 2019 and at the end of 2023, when he met with Crown Prince Mohammed bin Salman. Separately, Russian Foreign Minister Sergey Lavrov has met with his Saudi counterpart numerous times in the past few years. To underline this renewed working relationship, Russia has now made Saudi Arabia its guest country at this year's St. Petersburg International Economic Forum (SPIEF), scheduled for June 3-6, 2026.
The BriefWire