The distinguished guest could certainly be satisfied with the reception in Riyadh these days.
Namely, on September 3, Saudi Crown Prince Mohammed bin Salman personally welcomed, and after extensive talks, on the same day, personally saw off the President of the United Arab Emirates, Mohammed bin Zayed. This meeting between bin Salman and bin Zayed took place, by the way, on the eve of the announced virtual meeting of the eight petro-exporting countries from OPEC and the OPEC plus group (Saudi Arabia, Russia, Iraq, UAE, Kuwait, Kazakhstan, Algeria and Oman) on Sunday, which has been causing noticeable discomfort on the world’s petro exchanges for days. This is because the global petro-markets cannot assess what exactly the mentioned octet could debate on September 7, although expectations are that it should be about a possible (drastic?) new level of petro-production increase in October, maybe even further.
Nervousness in the stock markets is quite understandable.
Namely, OPEC and OPEC plus currently deliver about half of all oil on the world market: Saudi Arabia and Russia—the leaders of those two groups produce the most (with the ambition of further growth), while the UAE has long been interested in increasing its production from the current 3.2 million barrels/day to four million b/d as soon as possible, and later to the full 5 m b/d.
And that, despite the ongoing, steady decline in barrel prices on the world market, contradictory reports on global oil surpluses, and accompanying doubts about economic growth and demand from leading buyers, primarily China. The petro-octet has been keeping the stock market “on thin ice” since this spring, after a completely unexpected decision to increase their production of barrels every month from April, with the intention of returning about 2.2 million barrels to the market in 18 months. What was the motive behind that decision is still troubling the stock market today.
To fulfil US President Donald Trump’s wish for cheaper gasoline in the US? Or breaking the ground for the US competitors ? Or, to try to regain the global primacy and influence that OPEC had in the decades of great turmoil in the Near and Middle East in the second half of the 20th century?
A better understanding of the motivation behind the decision—whatever it is on September 7th—may require a different look at the delicate relationship between Mohammed bin Salman, Mohammed bin Zayed and Kremlin chief Vladimir Putin.
Recent examples?
Namely, after the recent meeting with the US leader, the Russian president informed Mohammed bin Salman by phone, not only about the course of the talks regarding the war in Ukraine, but also about the reasons why the Putin-Trump meeting was held in Anchorage, Alaska, and not in Riyadh. Afterwards, Putin also sent bin Salman a letter, the content of which is little known. Meanwhile, Mohammed bin Zayed has recently expressed the UAE’s willingness to double investments in Russia.
What is than oil today for Mohammed bin Salman, Mohammed bin Zayed and Vladimir Putin in their communications?
Additional grain of mystery before September 7, Alexander Novak, Deputy Prime Minister of Russia, added yesterday. There is no predetermined topic, the participants always consider the current situation and: “based on that, the issue is decided on the spot”, said Novak.
If so, petro-exchanges will only have to wait…
