The two sides expressed satisfaction with the cooperation aimed at “ensuring global oil market stability”

Russian President Vladimir Putin and Saudi Crown Prince Mohammed bin Salman held a phone conversation on Friday, the Kremlin press service has said. The two leaders discussed various issues, ranging from cooperation in the oil market to efforts in resolving “regional crises” in the Middle East.

“The parties discussed several key topics on the bilateral agenda, with an emphasis on further expanding mutually beneficial ties in trade, economic cooperation, investment and energy,” the Kremlin readout said. 

It added that both sides “expressed satisfaction with the level of coordination at OPEC Plus aimed at ensuring the global oil market stability” and that the “prospects for cooperation between Saudi Arabia and the BRICS were also considered.”

“The conversation proceeded in a friendly manner, was constructive and informative. With this in mind, it was agreed to build up contacts in specific areas of cooperation,” according to a statement from the Kremlin quoted by Reuters.

Saudi Arabia, OPEC’s de facto leader and top producer, and Russia, leading a group of non-OPEC producers, have been coordinating supply to the market since the beginning of 2017 under the so-called OPEC+ agreement. In the past six years, the leaders of Saudi Arabia and Russia have regularly discussed the production deal in telephone calls.

The OPEC+ alliance emerged in 2016, forged by the Organization of the Petroleum Exporting Countries (OPEC), dominated by Saudi Arabia, and a group of other major oil producers, led by Russia. Earlier this month, some of the leading producers within the OPEC+ group announced voluntary extra curbs of 1.16 million barrels per day (bpd) starting from May until the end of 2023.

The cuts came on top of a 500,000 bpd reduction in Russian output and a 2 million bpd reduction in the production targets in effect since last November. OPEC+ argued the move was needed to protect the oil markets from volatility, although it faced criticism from other organizations. The International Energy Agency (IEA) asserted the move would likely aggravate an oil-supply deficit and threaten the global economic recovery rather than help markets. 

Peacemaking

Apart from talking about oil-related issues, Putin and bin Salman discussed the peacemaking efforts in the Middle East, the Kremlin press service said. It did not elaborate which flashpoints of the troubled region they discussed.

“The two leaders exchanged views on various aspects of the developments in the Middle East in the context of the efforts Russia and Saudi Arabia are participating in to resolve regional crises,” the statement reads.

There have been indications in recent weeks suggesting that a number of the longstanding conflicts in the region, the wars in Yemen and in Syria in particular, may be nearing their ends through the ongoing diplomatic effort of various parties. 

Earlier this month, Syrian Foreign Minister Faisal Mekdad made a breakthrough visit to Saudi Arabia, the first such trip since Riyadh cut diplomatic relations with Damascus in 2012. Following the visit, Saudi Arabia publicly endorsed Syrian unity and integrity, and backed a political solution to the 12-year-long war. 

Last month, China mediated an agreement between Saudi Arabia and Iran to normalize relations, with the milestone triggering peace talks to end the eight-year-long conflict in Yemen, which has largely been fueled by a long-time rivalry between Tehran and Riyadh.

On April 2, a day before a regularly scheduled OPEC+ panel meeting, the biggest OPEC producers in the Middle East and several other members of the OPEC+ pact announced a total of 1.16 million bpd of fresh production cuts. OPEC heavyweights Saudi Arabia, Iraq, the United Arab Emirates (UAE), and Kuwait, plus OPEC’s Algeria and Gabon, and non-OPEC Oman and Kazakhstan, announced the 1.16 million bpd cut. That’s on top of Russia’s current 500,000 bpd cut, which was extended until the end of the year.

Saudi Arabia will also cut 500,000 bpd and said  the move was “a precautionary measure aimed at supporting the stability of the oil market.”

The surprise cut indirectly helps Russia, the leader of the non-OPEC group in OPEC+. A tighter market and higher prices would mean increased prices even for Russia’s discounted crudes, boosting oil revenues for Russia’s budget.