Russia’s Vladimir Putin met with Saudi Arabia’s prince Mohammed yesterday in what many will probably see as an unavoidable warming between two of the worst-hit survivors from the oil price crash.

This they are not, however, since Russia has decades of experience with tightening belts, waiting out storms, and living with a budget deficit. The same is certainly not true of the Kingdom, even though it has the lowest production costs for oil in the world. The Kingdom had never ever had a deficit until what was it, last year? And I haven’t even mentioned Venezuela on the list of biggest sufferers.

I’d rather interpret the meeting as somebody being stuck in a corner and needing all the help they can get to be able to unstick themselves from this corner. In case you’re wondering if I’m not into Russian propaganda (anything we don’t agree with these days seems to be immediately slammed as propaganda), consider this: back in 2015, the very same prince Mohammed warned Russia of “dire consequences” if it continued its support for Assad in Syria. Riyadh’s Foreign Minister accused Putin of being hypocritical about the Middle East because of Moscow’s support for Assad. Smacks of Erdogan, right?

Some of those who have been following events in the oil world over the last two years are of the opinion that Russia played a very good (or bad) trick on the Saudis with the OPEC agreement to cut production. I certainly share the opinion: the Russians pumped over 11 million bpd in November and agreed to take off just 300,000 bpd from this. Gradually. Saudi Arabia, on the other hand, had to agree to slash almost half a million barrels daily to make the agreement work. And it went beyond its call of duty to quench worries that somebody is bound to cheat, covering in advance for the potential cheater.

As a result, Russia has eaten into Saudi Arabia’s market share in China and, what must be worse, it is working with The Archrival, Iran. Thinking in Riyadh must have been along the lines that if they have America’s support, the Russians and the Iranians have no chance to gain the upper hand in the Middle East. Apparently, this line of thought has now been dropped in favor of cooperation, regardless of the multi-billion weapons deal Riyadh struck with President Trump earlier in the month.

There is no question that both Russia and Saudi Arabia are set to benefit from a rise in oil prices even though both are diversifying away from oil, so cooperation in oil policies certainly makes sense. Cooperation in power infrastructure also makes sense and is being discussed, as is anything that would generate budget revenues for both Moscow and Riyadh. After all, revenues usually beat political and ideological differences. Revenues pay the bills, not beliefs. By the way, both countries are, belatedly, moving on to green energy with large-scale capacity development plans.

The other thing I think is happening, is Saudi Arabia trying to pull Russia away from Iran. It would make sense, wouldn’t in, amid Iran’s recovery after the removal of most Western sanctions. The Persian nation is in a rush to bring its energy industry back on its feet, it’s already boosting exports (though some say the ramp-up came from stored oil and future exports will drop as this is depleted), and it is eager to welcome back foreign oil companies, some of the Russian. Incidentally, it also had its way in the OPEC agreement at the expense of the Saudis, allowed to ramp up its crude production while the others cut.

What’s more, moderate Hassan Rouhani just won a second term in office as president, which is a more or less clear signal that Iran is moving in what I believe is the right direction — away from religious conservatism that inevitably goes with political extremism. How nervous this is making Riyadh became obvious recently, when Qatar’s emir made those unfortunate remarks about strengthening ties with Tehran that prompted an immediate and pretty belligerent reaction. The remarks were eventually blamed on hackers, which is kind of hilarious if you think about it. Also a bit scary but let’s not spoil the mood.

And here’s another hilarious piece of news: the UN’s Secretary General, Antonio Guterres warned the US that if they pull out of the Paris Agreement, someone will fill in “the void”. And not just someone: Russia, China, and Iran will fill the void. Not Saudi Arabia, as you can see. Not the Gulf states. No. Russia, China, and Iran.

You might argue that China and Russia produce more emissions than Saudi Arabia and that’s true, I’m sure, but it’s not so much about emissions, is it? It’s about the global balance of powers because Guterres linked lack of support for climate change measures with lack of support for people’s safety. In other words, if you don’t work to curb the effects of climate change, you’re basically not fighting terrorism. In further other words, if you don’t play along in one game, we won’t play along with you in the other games.

Back to Russia and Saudi Arabia. The former has proved that it’s ready to play the field and work with both Iran and Saudi Arabia when it comes to trade. Anyone should, really, it’s common sense, and most players on the geopolitical scene are doing precisely that. It’s just not as public.

But I think there could be another trick for Riyadh in this new coziness. Russia can’t really afford to turn its back on Iran, not with the attitude–and sanctions–it’s getting from Europe and the US. So its turn East is another thing that makes perfect sense. A Russia-backed Iran is a stronger Iran and Saudi Arabia can’t have that. Confrontation has not done the trick, so cooperation is the obvious alternative. How successful it would turn out is anyone’s guess. Russia already played the Saudis once. It might play them again.

PS It’s a fact that there is Russian propaganda. There is also EU propaganda and US propaganda, and Saudi propaganda, also Chinese, Iranian, and you-name-it propaganda. Actually, I’d say more than half of what we read daily as news is nothing else but propaganda, playing on our confirmation bias. Which makes skepticism about everything that much more important.

 

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