Russia and OPEC: convenience but no marriage

March 13, 2019: Two years after they teamed up to take back control of oil markets, the alliance between Russia and OPEC continues to be effective.

But experts say talk of a more formal and permanent partnership are premature, with Moscow keen to maintain its independence.

Hit by a plunge in oil prices between 2014 and 2016, Russia and OPEC heavyweight Saudi Arabia at first blamed each other for the collapse that was wreaking havoc on their economies.

But in late 2016 Russia and OPEC came together, finally agreeing to limit their oil production that accounts for more than half of global supplies.

The alliance — dubbed OPEC+ — has endured, with regular meetings and agreements to maintain production limits.

On Monday, representatives will meet in a Baku hotel to review an accord that runs until June and to possibly propose extending it at an official meeting in Vienna in April.

They are also set to discuss formalizing an alliance that has breathed fresh life into OPEC and brought Russia new influence as an arbiter on the oil market.

The pact between OPEC and a dozen non-member countries including Russia was not an easy decision after years of fierce competition for market share that lead to overproduction.

“Before OPEC+ came into action, OPEC had practically ceased functioning,” said Rustam Tankayev, an expert at the Union of Oil and Gas Producers of Russia.

“The only chance for OPEC to regain the power to regulate the global oil market was to significantly expand the alliance.”

Francis Perrin, director of research at the French Institute for International and Strategic Affairs, also stressed that relations between Russia and OPEC “haven't always been easy”.

“OPEC used to consider Russia as an illicit hanger-on that was turning a profit from the efforts of others,” he said.

“The fact that they have made this cooperation long-lasting is already a real result.”

(APP)

Posted on: 2019-03-13T09:23:00+05:00

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