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Will Saudi Arabia's Geopolitical Strategy Backfire?



Russian Deputy Foreign Minister Mikhail Bogdanov said on Friday that Vladimir Putin is preparing to visit Saudi Arabia. The statement comes after the Russian president has received an invitation from Saudi King Salman at unspecified time, according to reports. Bogdanov added the visit is pending on Putin's schedule.

King Salman became the first Saudi monarch to visit Russia last October, meeting Putin in the Kremlin. The disclosure on Friday also comes just months after Prince Mahmoud Salmon visited China to attend the opening of the 2018 World Cup. He also meets with Putin during this visit.

While Bogdanov decides to talk about it, it seems to be on the agenda of Syria (where Moscow and Riyadh are on Syrian Civil War), aswell as talk about fresh US sanctions on Iran that could remove up to 1

million barrels per day of oil from global markets.

It was Russia that came to the aid of Saudi Arabia for all its practical purposes long ability to play shale oil production revolutionized markets.

As a refresher, late 2014 the Saudis responded to. production by trying, unsuccessfully, to protect their market share by not trimming production. shale producers out of business, allgation the kingdom vehemently denies to this day. Related: Poll: Oil to Remain at Current Prices in 2018

The Saudi attempt ineffective.

By 2015, the Saudis were swimming in debt and were forced to enact politically unpopular austerity measures. They finally turned to unprecedented fund raising through the issuing of international bonds, thus having little choice but to form a coalition with non-OPEC producers, led by Russia. In essence, what Saudi Arabia did for a year in oil markets it could no longer do without Russian help, a geopolitically weakened position for the Saudis.

In early 2016, OPEC and non-OPEC partners started to trim production, eventually reducing OECD Oil inventory levels to five-year averages and oil prices back up. The new oil price has gone down.

A rebound in prices has been allowed. Riyadh to put on hold its much hyped IPO for national oil company Aramco. People familiar with the matter told Bloomberg last week that the postponement does not mean a permanent cancellation, but at the end of the day it remains to be seen.

Saudis may be forced with a hard decision

Earlier this year, there's talk about a more permanent, 10 or even 20-year, Saudi-Russian oil production agreement, Salman told Reuters news agency.

What remains to be Seen however, in the successful recent history of the Russian-Russian agreement on OPEC, non-OPEC cartel would even work long term. Syria (where Russia supports the country's embattled president Bashar al-Assad, while Saudi Arabia, along with Qatar and Turkey, supports the Syrian rebels) it has nonetheless strained relations. Russia and Saudi Arabia Iran's nuclear power development ambitions. Related: Experts: Norway Should Stick with Oil

It's these very geopolitically dangerous quagmires that could cause the flinggling of Saudi-Russian relationship.

The growing friendship between Russia and Saudi Arabia thus comes, perhaps ironically, as US-Saudi relations reach a long-term high-water mark, largely orchestrated by both Washington's and Riyadh's distain for Iranian hegemony ambitions in the middle east, including its controversial nuclear development program.

Most agree that it was instrumental in convincing trump in May to reimpose sanctions on Iran. However, the job has not been too difficult since Trump campaigned in 2016 in a large part on an anti-Iranian nuclear accord platform. During his 2016 campaign, Trump also ratcheted up with Saudi Arabia over oil production, middle eastern issues and other issues – now two years later.

Now that Russia and the U.S. are gearing up to enter a new phase in Syria in what media has recently been using their local representative in a final push to defeat militant groups on opposing sides, the Saudis may have to make a hard decision on its relations with Washington and Moscow. 19659002] While Riyadh would have to be willing to make a painful relationship with either side at the end of the day. If so, history is on the side of the US-Saudi relationship, while historically Russian-Saudi relations have been strained. On the other hand, the Saudis have never been in a position where it's becoming influential in global oil markets. "" This is Russia. "

By Tim Daiss for Oilprice.com [19659002] More Top Reads From Oilprice.com:


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