Saudi Pays Surprise Visit To Russia -- July 1, 2015

Saudi pays Russia a surprise visit.

The news from the recent St. Petersburg Economic Forum, which took place from June 18 to 20, inspired a torrent of speculation on the future direction of energy prices.

But the real buzz at the conference was the unexpected but much publicized visit of the Saudi Deputy Crown Prince, as an emissary of the King. The Prince, who is also his country’s Defense Minister, carried the royal message of a direct invitation to President Putin to visit the King, which was immediately accepted and reciprocated, with the Prince accepting on behalf of his father.

It would be news enough that the unusually high level delegation from a long-time ally and protectorate of the U.S., like Saudi Arabia, was visiting a Russian sponsored economic conference, in a country sanctioned by the U.S.

Some saw this well publicized meeting as the first sign of an emerging partnership between the two greatest global oil producers. If the warmth of the meeting was any evidence, it seems likely that Russia, a non-OPEC producer, might come a lot closer to the fold.

That could mean that, at the very least, Russia would have a voice in the cartel’s policy decisions on production. And if so, it would be a voice on the side of stable but rising prices.

The great Indian journalist, M.K. Bhadrakumar (MKB), may have been the first to point out that there was plenty of reasons for the Saudis and Russians to come closer together. Among these are the U.S.’ diminishing dependence on Middle Eastern energy, due to the momentous development of shale resources. There’s also the over-riding goal of the U.S. to pivot toward the East, where a huge economic transformation is unfolding, while reducing the U.S. role in the Middle East. It’s clear that the Saudis are going to have to make new friends.

MKB also makes the point that although the Saudis are wildly opposed to any form of U.S. entente with Iran, the clear-eyed Kremlin understands that there are many temptations for its erstwhile ally, Iran, to move much closer to the west.

***************************************

 

Before l left for the day, I left this link for readers -- talk about a lot of story line:

• US crude oil production jumps (despite all efforts to rein it in)
• about 50% of US crude oil production comes from shale; about a third of that comes from the Bakken
• US crude oil stores jump (unexpectedly; Reuters had predicted a decrease)
• refinery operations near capacity
• gasoline stores decrease

Disclaimer: I often have my facts wrong. I often make factual and typographical errors. If this information is important to you, go to the source.