Saudi-Russian Oil Fling Becomes Marriage

[thackney]

Saudi-Russian Oil Fling Becomes Marriage
https://www.rigzone.com/news/wire/saudirussian_oil_fling_becomes_marriage-03-jul-2019-159216-article/
July 03, 2019

...Moscow and Riyadh led two dozen countries in signing a charter to formalize the OPEC+ group that for the past 2 1/2 years has coordinated supply to prop up the price of oil.

OPEC Secretary General Mohammad Barkindo compared the pact to a “Catholic marriage,” saying it would last for “eternity.”

“The charter may end the perennial questions of whether Russia-Saudi is a relationship built to last,” said Helima Croft, chief commodities strategist at RBC Capital Markets. “The charter is the ring in the relationship.”

It was a moment that would have been hardly imaginable three years ago, when decades of distrust were poisoning relations between the world’s two largest oil exporters as prices languished. In late 2016, in the face of skepticism from analysts and some senior figures in both countries, Khalid Al-Falih of Saudi Arabia and Russia’s Alexander Novak promised the output cuts they’d agreed on would last just six months.

Oil Diplomacy

This week, the group agreed to extend the cuts into a fourth year, to March 2020. But signing the charter was a key moment in a much broader Saudi-Russian diplomatic effort....

[IsailedawayfromFR]

Saudi-Russian Oil Fling Becomes Marriage
https://www.rigzone.com/news/wire/saudirussian_oil_fling_becomes_marriage-03-jul-2019-159216-article/
July 03, 2019

...Moscow and Riyadh led two dozen countries in signing a charter to formalize the OPEC+ group that for the past 2 1/2 years has coordinated supply to prop up the price of oil.

OPEC Secretary General Mohammad Barkindo compared the pact to a “Catholic marriage,” saying it would last for “eternity.”

“The charter may end the perennial questions of whether Russia-Saudi is a relationship built to last,” said Helima Croft, chief commodities strategist at RBC Capital Markets. “The charter is the ring in the relationship.”

It was a moment that would have been hardly imaginable three years ago, when decades of distrust were poisoning relations between the world’s two largest oil exporters as prices languished. In late 2016, in the face of skepticism from analysts and some senior figures in both countries, Khalid Al-Falih of Saudi Arabia and Russia’s Alexander Novak promised the output cuts they’d agreed on would last just six months.

Oil Diplomacy

This week, the group agreed to extend the cuts into a fourth year, to March 2020. But signing the charter was a key moment in a much broader Saudi-Russian diplomatic effort....

Definition of a monopoly and the antithesis of free market conditions.

Breakneck growth in U.S. shale oil production, combined with worries about slowing demand growth, mean that the OPEC+ group has little choice but to continue its cuts or see prices plunge.

Al-Falih acknowledged as much, saying that oil producers would need to “keep adjusting” until U.S. shale production eventually peaked.

This will indeed happen, likely sometime in during the next decade.  The only problem for OPEC and Russia is can they survive enough until then?