The two governments – also two of the world’s major energy producers – had reportedly agreed to “institutionalize” the relationship between Russia and the Organization of the Petroleum Exporting Countries (OPEC). Does this include all the OPEC members who are meeting in Vienna on Friday? Almost certainly not.
OPEC exists in theory to ensure its members’ market share of the global energy market and to try and boost oil prices, ensuring their major source of income remains lucrative. But it depends on consensus and coordination between the members. And geopolitics can intrude – in this case, the deepening enmity between two of the major oil producers: the Saudis and Iran. [...]
Now, though, some nations – led by the Saudis and Russia – are calling for an increase in production. They are losing market share to U.S. shale oil producers and argue that, since demand is currently high, putting more oil on the market will not dramatically affect prices. They calculate that any dip in prices will be offset by the increase in production. [...]
A U.S.-Saudi-Russia axis could increase the Trump administration’s economic clout, especially when it is anticipating trade wars with Europe and China. It would also lock the United States into a new power partnership, separate from its traditional alliances in NATO and with the European Union, fulfilling Putin’s long-cherished dream of undermining the postwar Western alliances that prevailed over the Soviet Union. Now it seems he wants to undermine OPEC as well.
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