Why Russia Agreed To Deeper OPEC+ Output Cuts

Russia’s balance sheet from its cooperation with Saudi-led OPEC is absolutely positive in economic and geopolitical terms.

Russia has been gaining extra billions from higher prices bolstered by the OPEC+ production cuts, gaining the goodwill of Saudi Arabia and other OPEC members for helping engineer the production cuts agreement and also gaining a lot of influence over oil prices and the global oil market.

Geopolitically, Russia has been benefiting from a growing disenchantment with the United States in the Middle East and has also been preparing itself to fill the political vacuum along with China when the United States eventually departs the Middle East.

All these benefits were achieved by Russia for the price of agreeing to support production cuts by OPEC+ while itself cutting less than 200,000 barrels a day (b/d) from its production.

Unlike Saudi Arabia and other OPEC members, Russia’s economy could live with an oil price of $40 a barrel or even less compared with $80-$85 for Saudi Arabia and other OPEC members.

I named the so-called OPEC+ cuts as the cuts that have never been. The claim that OPEC+ added 500,000 barrels a day (b/d) to its already existing cuts is a farce to say the least since this new cut merely offsets Iraq’s and Nigeria’s failure to comply with their shares of the cuts under OPEC+ production cut agreement.

Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London

Its funny how the pro russian gov types have positive attitudes about the Saudi's as long as it benefits russia in some way.