Despite the energy crisis and rising fuel prices caused by the war in Ukraine, the Organisation of Petroleum Exporting Countries (OPEC+) has remained a strong and solid partnership characterised by the strong unity of its members. However, this energy alliance is revealing some cracks due to disagreements between the group’s main members: Saudi Arabia and Russia.

The tensions that have been building up for months were at the centre of the recent OPEC+ meeting in early June, where the need to stabilise the oil market was once again highlighted. To this end, Saudi Arabia announced new cuts in crude oil production, adding to the previously agreed limitations.

In fact, the current tensions between Riyadh and Moscow are a response to a similar measure established by the organisation at a meeting in April. At that meeting, Russia pledged to cut production by 500,000 barrels per day in favour of stabilisation. However, since then, there has been no evidence that Russian crude oil supply has decreased.

Moreover, countries such as India and China are buying a record amount of Russian oil at low prices. Both Asian powers have become key customers of the Kremlin following the start of the invasion of Ukraine and subsequent Western sanctions against Moscow, which needs to bolster the domestic economy and continue to fuel the war machine in Ukraine.

The Russian government has found ways to circumvent the embargoes and continue selling one of its most important raw materials. India and China are replacing Western countries that traded Russian oil before the war, getting more crude at lower prices. There are also indications that some of the Russian oil arriving in India is refined and subsequently sold to the West.

This lack of commitment on Russia’s part arouses mistrust among the other OPEC+ members, especially Saudi Arabia, which has been displaced by the Russian giant as China’s largest oil exporter during the first months of the year. In India, Russia has also positioned itself as the main supplier, surpassing Saudi Arabia and Iraq combined. For these reasons, many analysts see Russia as the only major beneficiary of the production cut. This measure also significantly strained ties between Saudi Arabia and its Western partners such as the United States.

The misgivings have prompted Saudi energy minister Prince Abdulaziz bin Salman to demand clarity and transparency from his Russian counterparts. “Some time ago they made a decision not to disclose the information, and I think they are now realising that not disclosing that data has caused doubts about their figures,” the minister said in an interview with Al Arabiya, recalling Russia’s decision not to officially report its production levels.

Bradstock warns that if Russia continues to undercut OPEC+ prices and ignore its quotas, “it could lead to chaos in the hitherto stable energy alliance”. On the other hand, Moscow’s behaviour could cause a shift in the OPEC+ countries’ position on the war in Ukraine. “If Russia continues to play this game, it is unlikely to retain the support of OPEC+, which has so far neither condemned nor punished its actions,” he adds.

Moscow insists that it is cutting production as agreed, stressing the importance of OPEC+ as “an effective instrument to help maintain oil market stability”, according to Russian Deputy Prime Minister Alexander Novak. They also deny tensions with Saudi Arabia, since, according to Kremlin spokesman Dmitry Peskov, ties between the two remain “constructive” and “based on understanding, respect and mutual trust”.
Source: Atalayar