Putin, Saudi King focus on Syria, oil price stabilisation

EPA-EFE/ALEXEI NIKOLSKY/SPUTNIK/KREMLIN

Russian President Vladimir Putin and Saudi King Salman bin Abdulaziz Al Saud meet in the Kremlin, Moscow, Russia, October 5, 2017.

Russia still backs Saudi-led initiative to cut oil supplies


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Russian President Vladimir Putin and Saudi Arabia’s King Salman bin Abdulaziz Al Saud held talks in Moscow on October 5 behind closed doors, focusing on the Syrian crisis and energy.

“We have held detailed talks behind closed doors to talk about bilateral relations and the situation in the region,” TASS quoted Putin as saying. “That was a very meaningful, substantive and confidential conversation,” he added. According to the Kremlin chief, Russia is glad to welcome the Saudi King during his first visit to Moscow.

Russia sees huge potential for boosting ties between Moscow and Riyadh. King Salman invited Putin to pay a visit to Saudi Arabia. Putin has accepted the invitation. Putin visited Riyadh in February 2007.

“I think it is more a political than economic visit,” Vladimir Tikhomirov, chief economist at BCS Global Markets in Moscow, told New Europe on October 5. “Apart from Syria, the other key issue discussed is coordination between the two countries in stabilising the oil price. Bilateral investment projects come as an add-on to discussion of these two prime topics,” he said.

Slava Smolyaninov, a strategist at BCS, told New Europe the markets have been indifferent to the Saudi King’s visit. “It doesn’t look like anybody is willing to bet on better Russia-Saudi relations or new portfolio investments or direct investments, at least at this stage. This is the clear the signal that the market is sending,” he said.

The situation in Syria must be settled by political means, which will guarantee security and stability, as well as the country’s territorial integrity, the Russian news agency quoted King Salman as saying. Saudi Arabia seeks to continue cooperation with Russia for achievement of stability on global oil markets, he said. “We are eager to pursue positive cooperation between our nations for achievement of stability on global oil markets, which will facilitate growth of the global economy,” he added.

OPEC-kingpin Saudi Arabia and Russia helped reach a deal between the Organization of the Petroleum Exporting Countries and non-OPEC to cut output by 1.8 million barrels per day from January to lift crude prices.

“The OPEC plus agreement has been in place for a long time and now the idea is how deep Russia wants to be involved and for long the agreement will stay,” Smolyaninov said. “Russia is the biggest plus in this OPEC-plus formula. Obviously, they need Russia to participate in this agreement. Russia wants the oil price to stay at this comfortable level. There is more agreement and more cooperation than perhaps in the past,” the BCS strategist said. “The question is what is going to happen in the OPEC-plus deal.”

Chris Weafer, a senior partner at Macro-Advisory in Moscow, reminded in a commentary on September 29 that the newfound relationship resulted from Russia’s agreement to make a significant contribution to the Saudi-led initiative to cut oil supplies coming onto the world market last November. “That was certainly a key factor, especially since very few actually expected Russia to make any effort to comply, never mind to fully adhere to its commitment,” Weafer wrote.

Meanwhile, Sibur, Russia’s largest producer of petrochemicals, and Russian State Investment Fund (RDIF) on October 5 signed a memorandum of understanding with energy company Saudi Aramco to exploit possible cooperation in Russia and Saudi Arabia, Reuters reported. The companies plan to evaluate the potential of the petrochemical markets of both countries and consider the possibility of expanding cooperation, Sibur said in a statement.

“The partnership with one of Saudi Arabia’s biggest petrochemical companies will allow Sibur to develop its expertise and sales areas and to study …the Middle East market,” Sibur Chairman Dmitry Konov said.

Moreover, RDIF and Saudi Arabia’s sovereign fund Public Investment Fund (PIF) plan to invest in more than 25 projects in the areas of consumer goods production, agriculture, real estate, infrastructure, oil and gas sector, TASS reported. Russia’s Industry and Trade Ministry reported following the meeting of Russian Minister of Industry and Trade, Denis Manturov, and Saudi Minister of Energy, Industry and Mineral Resources, Khalid al-Falih, in Moscow on October 4.

 

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