Much is at stake for the oil market in two imminent state visits by Russian President Vladimir Putin.
Putin will visit Saudi King Salman in Riyadh Oct. 14 and Abu Dhabi Crown Prince Mohammed Bin Zayed Al Nahyan in the United Arab Emirates the next day.
The Riyadh visit reflects a thawing of traditionally chilly relations that began in late 2016, when Saudi Arabia and Russia anchored a multinational agreement to defend oil prices with production restraint.
The 33-month-old effort is crucial to crude-price stability and depends on the participation of both countries.
Salman, who visited Moscow in 2017, and Putin, who last visited Saudi Arabia in 2007, have much else to discuss.
Salman cannot like Russia’s coziness with Iran, suspected in the Sept. 14 aerial attacks on Aramco’s Abqaiq processing center and Khurais oil field.
Saudi leaders worry about a loose alliance among Russia, Iran, and Turkey. And they have new reason to doubt reliability of the US, a once-solid ally that wouldn’t help them respond to the September incursions and that stood aside so Turkish forces could attack Kurds in northeastern Syria Oct. 9.
Putin has concerns, too. Saudi investments in Russia worth billions of dollars promised in 2017 remain only promises.
And plans have frozen for a $6-billion joint-development fund. Russia wants to use the money for energy projects; Saudi Arabia does not.
In the UAE, too, Putin will promote relations forming around agreements for joint investments.
He also might seek Emirati help loosening Saudi opposition to the government of Syrian President Bashar Al-Assad. The UAE reestablished relations with Syria last December after a 12-year break.
If these meetings don’t go Putin’s way, will he decide to please Russian oil companies by withdrawing from the production agreement?
That’s one of two crucial questions for the oil market.
The other is whether Saudi Arabia would follow Russia out of the accord rather than carry more than its already heavy share of the growing burden of oil-supply management.
(From the subscription area of www.ogj.com, posted Oct. 11, 2019. To comment, join the Commentary channel at www.ogj.com/oilandgascommunity.)