OPEC oil output agreement could be extended beyond March 2018

Frederick Owens
October 6, 2017

Saudi Arabia will allocate Russia $1 bln for joint energy projects, Russian Minister of Energy Alexander Novak said.

Russian president Vladimir Putin and Saudi Arabia's King Salman have opened talks in the first official visit of a Saudi monarch to Russia. The agreement remains in force until the end of March 2018.

The Dubai-based television channel also said that Saudi Arabia had signed a memorandum of understanding to help the kingdom in its efforts to develop its own military industries.

Together they produce about a quarter of the world's oil and past year clinched a deal created to eliminate a global supply glut, in part triggered by the rapid rise in American production.

Several investment agreements will be signed during King Salman's trip and plans for a $1-billion fund to invest in energy projects are likely to be finalized.

Russian Federation is not a member of the oil cartel Opec, but it has collaborated with Opec members on suppressing production to drive up oil prices.

The two also diverge on Yemen, where a Saudi-led coalition military intervention in the country has killed more than 10,000 people since 2015, drawing criticism from Moscow and the worldwide community.

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King Salman said that positive cooperation between the kingdom and Russian Federation supports the stability of the global economy.

Vedomosti newspaper reported that Saudi Arabia's sovereign fund is also eyeing investment into a toll road project in Moscow, which would be the first one for the capital. However, Aramco chief executive Amin Nasser said such a deal was not being discussed at this stage.

Riyadh's recent overtures toward Moscow underline a new diplomatic approach by Saudi Arabia toward regional and worldwide issues, one that is rooted in pragmatism and realism.

"There is some interest, of course", he said. "If we relax, we will not fully accomplish the work".

Both Israel and Saudi Arabia fear that with Russian acquiescence, Iran is building a corridor of territorial control through Iraq and Syria to its powerful proxy Hezbollah on Israel's border in South Lebanon.

While Riyadh's ties with Washington remain solid, the new Saudi-Russian entente will be essential in bringing stability to a region in turmoil. Diplomatic relations were restored in 1992, after a five-decade hiatus, but Riyadh and Moscow found little common ground.

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