Saudi Arabia and its allies in the Organization of the Petroleum Exporting Countries (OPEC) are reportedly trying to deepen partnership with Russia-led oil producers, seeking to seal a new formal pact with Moscow.
The proposal to transform the oil cartel, which is aimed at supporting the global oil market amid US refusal to curb output and pressure on the organization, might be discussed at the coming meeting in Vienna later this month, according to OPEC officials cited by the Wall Street Journal.
However, such an idea to formalize the union between OPEC and other major oil producers has not been welcomed by all the members of the cartel. The move has reportedly met opposition from Iran, as it fears that Moscow and Riyadh would take control over the group. Tehran has been cooperating with Moscow for years, but is at loggerheads with its regional rival Saudi Arabia.
Russia is not a member of OPEC, but it has been cooperating with the organization under the so-called OPEC+ deal in a bid to stabilize the oil market and bolster crude prices. Following months of declining oil prices, the 15-member alliance and non-OPEC allies led by Russia agreed to significantly slash output in December.
The idea to set up a joint structure with OPEC was floating for some time last year. But in December, Russia’s energy ministry ditched the proposal, saying that any official alliance would only create a new headache for all the players on the market. At the same time, it stressed that the cooperation with OPEC and allied major oil producers will continue.
In January, the UAE’s energy minister said that if OPEC’s agreed cuts of 1.2 million barrels per day would not be enough, the members and allied countries are ready to extend the deal. However, the introduced measures have already affected the market, with crude prices rising to the highest level since late November 2018 earlier this week.