The slump in world oil prices was a headline agenda topic in talks between Saudi Arabia’s and Russia’s top diplomats in Moscow on Tuesday, although comments after the meeting were dominated by the conflicts in Syria and Iraq.
The Saudi foreign minister Adel Al Jubeir met his Russian counterpart Sergei Lavrov in the Russian capital to resume talks that began last week in Doha, when the two were joined by the US secretary of state John Kerry in an unsuccessful effort to find common ground on ways to deal with the chaos caused by the Iraqi and Syrian civil wars.
The Russian foreign ministry said that Mr Lavrov and Mr Al Jubeir also discussed “closer coordination on global energy markets”, although it was not clear what that might have entailed.
Indeed, the two countries are fierce competitors for markets, especially China, where Russia supplanted Saudi Arabia as the largest crude oil supplier in June, when its exports jumped 20 per cent and Saudi’s fell 42 per cent.
“As producing countries their economies are already heavily impacted and might suffer more,” said Arno Berins, the head of energy at the Centre for European Policy Studies in Brussels. “I would guess that they would talk about the low oil prices and the impact of the Iran deal.”
With the lifting of nuclear-related sanctions on Iran expected to take effect at the end of the year, a significant amount of new crude is expected to hit the markets next year and beyond. The estimates, however, vary widely depending on Iran’s ability to attract new investment and repair its hydrocarbon sector’s infrastructure.
Saudi Arabia has steadfastly refused to limit its production – or to coordinate lower output within Opec – to hold on to market share and put the onus on higher-cost producers to cut back.
According to Opec’s monthly bulletin, Saudi Arabia was pumping at a rate of more than 10.3 million barrels per day last month, the same as the previous month. Russia’s output was also near a record, at just under 10.7 million bpd.
Any discussion of energy issues are likely to be linked to political discussions, with Russia an ally of the current leaderships in both Damascus and Tehran.
Russia also has been jockeying for a share in Saudi Arabia’s plans to build its own peaceful nuclear power industry.
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