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Oil war: Russian tactics in the Gulf

The Saudi-Russian wrangling over oil prices and global market share this week is evidence of a new relationship between Russia and the Gulf countries

Ahmed Mostafa , Thursday 12 Mar 2020
Russia, Saudi Arabia
Saudi Arabia's Minister of Energy Prince Abdulaziz bin Salman Al-Saud and Russian Energy Minister Alexander Novak (Reuters)
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As global oil prices crashed on Monday, US analysts started to float the notion that Russian President Vladimir Putin is orchestrating a price war in the oil markets to hurt shale oil and gas producers in the US.

They argue that Putin has pushed Saudi Arabia into launching this war by refusing to agree to additional cuts in production at a meeting between Saudi-led OPEC and its partners led by Russia in Vienna last week.

As the production cut deal failed on Friday, the Western media started headlining the conclusion that OPEC+ is dead. The alliance of oil producers from OPEC members and non-members, called OPEC+, was put together four years ago with the aim of balancing the oil markets. Through Saudi-Russian cooperation, it managed to stem prices by taking out much of the oversupply in the market.

However, with the current spread of the new coronavirus worldwide, demand for oil has been hit and prices have started to go down. OPEC+ needed to cut production further to keep prices from falling. Saudi Arabia proposed decreasing output by an additional 1.5 million barrels per day, provided that Russia (and other non-OPEC producers) were part of the deal. The Russians refused and stated that they were content with the current low level of oil prices.

Russian Oil Minister Alexander Novak told his counterparts at the Vienna meeting that OPEC+ was not over, meaning that Russia would still cooperate with Saudi Arabia. Though the Saudis wanted stable oil prices, probably higher than the Russians would be happy with, Saudi Arabia cannot risk losing market share.

It has been shouldering the largest production cuts since 2016, and there could be a shared concern with Moscow about rising American output in recent years, mainly from shale deposits.

The Saudi-Russian wrangling about oil prices and market share testifies to the burgeoning relationship between Putin’s Russia and the Gulf countries. Moscow understands that the Gulf countries are close to the US and will not risk poisoning their relations with Washington for Russia’s sake.

Yet, it is also becoming clear that the US Trump administration is less of a close ally. When Iranian missiles and drones hit Saudi oil facilities last September, Trump provided only verbal support. Putin was quick to advise the Saudis to buy Russian missiles, saying that these were better than American ones.

Relations between Russia and the Gulf countries, mainly the United Arab Emirates and Saudi Arabia, have started to develop over recent years. The UAE has been widening its foreign alliances, looking east rather than west, and though it has not abandoned its close alliance with the US and Europe, it has begun to strengthen its relations with China, India and Russia.

It has managed to diversify its economy away from oil, and now it has opted to diversify its foreign policy too and its economic ties along the way.

Under the leadership of Crown-Prince Mohamed Bin Salman, Saudi Arabia has followed the same path. Moscow has also welcomed the new warmth with Riyadh after decades of icy relations. Some analysts, especially in the Gulf, speak about high expectations by the Russians that the Saudis will invest more in their country and even buy Russian armaments.

While this has not happened, Russia has become frustrated, and the UAE may have invested more in Russia than Saudi Arabia.

One Russian commentator described Russia’s policy in the Gulf as being a “strategy of flexible geometry.” This would explain why the two parties have met in many hotspots in the region, such as Libya and Syria. Russia’s main focus is Syria, where it has relied on cooperating with Turkey and Iran. However, Iran is now in a very weak position and is almost incapable of projecting its influence.

Seizing on the Gulf’s distrust of Turkey owing to Turkish support for Islamists in the region and the resentment of the UAE and Saudi Arabia towards Turkish President Recep Tayyip Erdogan, Moscow has started a tactical shift.

Russia has shared interests with Turkey, but Putin has always dealt cautiously with Erdogan, and Turkey is now occupying parts of Syria regardless of the interests of the other parties involved. Erdogan has also been playing his allies off against each other – the Americans, fellow members of NATO, the militant Islamists – to advance his stance even against compromise with the Russians.

The Emirati and Saudi stance on Syria has recently changed, and this is an opportunity Putin will not want to miss. The two Gulf countries might have more to offer Russia on Syria than Turkey does, and Russia will not object to the Gulf countries’ efforts to curb Iranian influence in the region. Putin has been following a standard geopolitical approach.

Russian diplomatic envoys and military and intelligence officials have been visiting the two Gulf countries and Jordan extensively over the last few months. Syria has been the main subject of discussion, along with the wider issue of fighting terrorism in the region, especially in Libya. Moscow knows that Erdogan is on the other side on both the Syrian and the Libyan crises.

For Russia today, the UAE and Saudi Arabia are more important to have good relations with than Turkey’s Erdogan. Neither of these two Gulf countries is playing dirty tricks and using the US and European cards for its own advantage against Russia as Erdogan has been doing.

 

*A version of this article appears in print in the  12 March, 2020 edition of Al-Ahram Weekly

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