Iran threatened by Russia-Saudi oil pact
Oil dealings between Moscow and Riyadh raise suspicions in Tehran, but Iran may soon learn they have a silver lining.
Tehran is irritated and concerned by recent talks between Moscow and Riyadh on a mechanism to exert greater control over world oil markets.
On Feb. 18, Russia’s President Vladimir Putin spoke by phone with King Salman bin Abdul-Aziz Al Saud of Saudi Arabia. “The two leaders praised the high level of cooperation achieved, including in trade, economic and investment areas," read an official Kremlin statement. "When exchanging views on the global hydrocarbon markets situation, the parties reaffirmed their readiness to continue coordination between Russia and Saudi Arabia.”
Earlier this month, the Saudis reportedly made an effort to create a new structure to regulate the oil market. The institution is expected to be formed on the basis of the 2016 Vienna agreement — a deal between OPEC and 10 non-OPEC countries (the so-called OPEC+) to temporarily limit their oil output to stabilize the oil market and ensure the growth of oil prices. Since 2016, this agreement has been extended several times and has partly managed to achieve its goals. However, the experience of the past two years clearly shows that, to impact the oil market, temporary measures are not enough.
Instead, there is a need for a forum-like structure that would monitor the situation in the market and, when necessary, take practical steps to regulate the volume of oil production by its members to ensure the balance between supply and demand. Under these circumstances, it was natural for Saudi Arabia and Russia, as informal leaders of OPEC+, to suggest the creation of such a new structure.
