Russia’s Complicated Relationship With OPEC
Russia, Saudi Arabia, and the United States are the world’s most important oil producers. While there has been a lot of discussion about Saudi Arabia’s move to crush U.S. shale by flooding international markets with oil, the relationship between Saudi Arabia and Russia is much less understood.
Saudi Arabia and Russia have a lot in common. Both depend on oil exports for an overwhelming portion of their budget revenues. Both put energy issues at the heart of their foreign policy and use oil (and in Russia’s case, natural gas) as tools to achieve political objectives.
But Russia is not a member of OPEC, and has suffered enormously as a result of Saudi Arabia’s decision to seek contractions in oil production from abroad. The head of Rosneft, Russia’s state-owned oil company, harangued OPEC (and by implication, the Saudi kingdom) at a London Conference on February 10. Rosneft’s Igor Sechin, who has been personally targeted by western sanctions, said that OPEC “has lost its teeth” as a result of its decision to keep oil production at elevated levels, a move that has led to market “destabilization.”
The verbal barrage suggests that Russia, more so than OPEC (or at least Saudi Arabia), is the one that is suffering under Saudi Arabia’s decision.
OPEC has sought Russian cooperation on oil output levels in the past, offers that Russia has thus far declined.
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