Most acute is the ongoing oil price war between Moscow and Riyadh, which has demonstrated how Russia has overplayed its hand in the region. Russia didn’t want to be strong-armed into further cuts to its lucrative oil production. As the pandemic stretched on, there were estimates that it could knock out as much as a third of global oil demand. This is the reason behind the 30% Decrease in price. The mayhem gave birth to an historic truce, bringing together OPEC and countries from the Group of 20 nations that have long criticized the cartel. Saudi Arabia and Russia, two of the world’s oil superpowers, had worked together since 2016 to control output and support prices. Saudi Arabia and Russia feud over oil prices following the biggest one-day price crash since the Gulf War in 1991. In a new survey, international relations experts are pessimistic about the years to come. That has created downward pressure on energy prices, which is why in 2016 members of OPEC (but really Saudi Arabia) and Russia agreed to limit production in the service of higher prices. His latest book is False Dawn: Protest, Democracy, and Violence in the New Middle East. "The Gulf countries see Moscow as an important power that can play a broader security role in the region over the long term. When Saudi Arabia says this all other countries also have to reduce their rates. Published Mon, Mar 9 2020 6:48 AM EDT Updated Mon, Mar 9 2020 1:41 PM … "The Saudis have a potent weapon at their disposal, namely spare production capacity," Stephen Brennock, oil analyst at PVM Oil Associates, said in a research note. Saudi Crown Prince Mohammed bin Salman’s Vision 2030 is expensive, after all. With oil demand plunging because of … ... An oil-price war between Russia and Saudi Arabia sent more shock waves through "a world economy already reeling from ... "March 2020 … "Saudi policy will now revolve around inflicting pain on other producers over the short term, but its long term objective is to be the predominant market manager and price setter," analysts at Eurasia Group said. Russia Is Losing the Oil War—and the Middle East Saudi Arabia's Minister of Energy Prince Abdulaziz bin Salman Al-Saud and Russian Energy Minister Alexander Novak at the start of an OPEC and NON-OPEC meeting in Vienna, Austria, December 6, 2019. But that is not the case. The group, dubbed “OPEC+,” controlled almost half of the world’s oil production and led to a resurgence of the cartel. It was irked by the use of U.S. sanctions to prevent the completion of a pipeline linking Siberia’s gas fields with Germany, known as Nord Stream 2. Washington has contributed to their developing relationship. A Division of NBCUniversal. Russian President Vladimir Putin speaks during the Presidential Prizes In Science and Innovation Ceremony at the Kremlin on February 06, 2020 in Moscow, Russia. There are winners from rock-bottom oil prices -- among them China, the world’s largest oil importer, whose recovery from the virus will be key for the global economy. Russia and nine other countries had joined forces with the 13-member Organization of Petroleum Exporting Countries in 2016. Global Business and Financial News, Stock Quotes, and Market Data and Analysis. Oil prices suffered an historic collapse overnight after Saudi Arabia shocked the market by launching a price war against onetime ally Russia. "Extensive pain from the oil price shock will accumulate over the course of 2020 and create the necessary conditions for negotiations, compromise, and probably a new production restraint agreement," they added. Many drillers in Texas and other shale regions look vulnerable, as they’re heavily indebted and already battered by rock-bottom natural gas prices. In a different context, the Italian Marxist political theorist Antonio Gramsci once wrote about the “interregnum” after the death of one order while the “new [order] cannot be born.” It is in this period that Gramsci observed “morbid symptoms appear.”. It complained that its three-year deal with OPEC, which has been managing global oil supply since 1960, had aided America’s shale industry. Most acute is the ongoing oil price war between Moscow and Riyadh, which has demonstrated how Russia has overplayed its hand in the region. An oil price war between Saudi Arabia and Russia will most likely accumulate over the course of the year, energy analysts have told CNBC, with no end in sight until 2021 at the earliest. That prompted some old-guard Texas oil drillers to urge state regulators to clamp down on crude production for the first time in nearly half a century in a coordinated effort with Saudi Arabia and Russia to calm the market and stave off a total industry meltdown. This didn’t make a lot of sense because by then it was clear to most that the coronavirus was forcing economies to shut down one after another and thus depressing demand for oil and gas. Get this delivered to your inbox, and more info about our products and services. On April 2, U.S. President Donald Trump called for a coordinated production cut, becoming the first U.S. leader in decades to move to drive up the price of oil. By fracking its way to what U.S. President Donald Trump calls “energy independence” (whatever that is supposed to mean), the United States has flooded markets with natural gas and oil. From a Saudi perspective, this seemed to be an entirely reasonable position, but the Russians rejected it, saying they wanted to assess the full effects of the novel coronavirus on the global economy before cutting production. For the Saudis, the Russians were a hedge against an unpredictable United States, where, despite political dysfunction and polarization, there seems to be broad agreement on the need to leave the Middle East. Steven A. Cook is the Eni Enrico Mattei senior fellow for Middle East and Africa studies at the Council on Foreign Relations. 15 Mar 2020 13:15 GMT Business & Economy , Saudi Arabia … The Saudis said they could do the same, and global oil prices plunged. Sign up for free newsletters and get more CNBC delivered to your inbox. "As the long-time purveyor of global spare capacity, Saudi Arabia is reopening the oil spigots after having done most of the heavy lifting in curbing supply.". An oil price war between Saudi Arabia and Russia will most likely accumulate over the course of the year, energy analysts have told CNBC, with no end in sight until 2021 at the earliest. Whether this was actually at America’s expense is debatable, but perception is often more important than reality. We are in such a moment now, which is why those searching for a new order should not mistake the apparent strengthening of Saudi-Russian ties in the previous few years for anything other than a function of decay, not a feature of an emerging and novel global system. The agreement was about oil production, but it held out the prospect of a changed configuration of relations in the Persian Gulf. Higher prices re-invigorated U.S. fracking, propelling the U.S. past Saudi Arabia and Russia as the world’s No. Macron’s Not Worried About Islam. Russia now has to reduce its rate, if not the countries will buy it from Saudi Arabia. What an all-out oil price war means for the US, Saudi Arabia and Russia. At the least, Putin wanted everyone to believe that he could nudge the Saudis—as he has done with the Turks and Egyptians—away from the United States. Brent fell to its lowest level since September 26, 2003 on Wednesday, while WTI slumped to lows not seen since March 6, 2002. "In a severe scenario, if the market struggles to find a home for surplus barrels then oil prices might have to trade down into the teens in order to shut in oil production," they added. "Putin wants to deal now — why else would he risk the much improved relationship with Opec+ and the Saudis, and even his popularity at home going into the vote next month.". We want to hear from you. Perhaps only the Chinese qualify, as they can look forward to cranking up their post-coronavirus economy with the help of cheap oil.