Riyadh: A study group from Saudi had warned ‘Our analysis shows that back in 2011-2012 when Libya experienced supply disruptions, prices for crude could go to sky-rocket. The same can be repeated in the future. If it were not for the decisions made by Russia and Saudi Arabia as part of OPEC+ cooperation, in 2018, we could easily see oil rallying towards $300 per barrel,’
Therefore, the group underlined the need to have coordination between the oil-rich countries within and outside of OPEC. The Saudi study groups warning seems to have come in the wake of the objection raised by Iran for the increasing cooperation between Saudi and Russia. But the study group has avoided a direct mention of Iran.
The crude oil rates in the international markets crashed by 7% on the fears of additional supply. This is the largest fall in the oil rates in the last 16 months. The rates are claimed to have crashed due to the possibility of additional crude supply from the United States and Russia. The irregularity in the crude rates is also attributed to the US sanctions against Iranian crude. Therefore, to stabilise the supply and rate of crude, Saudi Arabia who Chas an influence on OPEC has started cooperation with Russia over the last few months.
Russia and Saudi took some crucial decisions to maintain a balance in the crude supply and rates, given the US sanctions against Iran. The other Arab countries in the Gulf had supported the Saudi initiative. But Iran criticised the Russia-Saudi front. Iran accused that the Russian and Saudi moves regarding the crude supply have violated the OPEC rules. Iraq and Venezuela supported the stand taken by Iran. But a possibility was being predicted that the Iranian opposition to OPEC will affect the international crude prices.
Saudi and Russia avoided commenting on the stand taken by Iran, an OPEC member and the largest producer of crude in the Gulf. But, Adam Sieminski, President of the study group ‘King Abdullah Petroleum Studies and Research Centre’ has given his opinion on the Saudi-Russia OPEC plus front, targeting Iran. OPEC is necessary to decide the supply and rates for the crude and natural gas. Sieminski also warned that in the absence of OPEC there would be no control over the crude supply and prices. Sieminski reminded of the civil war sparked against the former Libyan dictator Muammar Gaddafi for this purpose.
The rates of crude in the international markets had sky-rocketed during the civil war, as the Libyan crude supplies were affected. Sieminski pointed out that in the absence of OPEC plus formed by Saudi and Russia, the crude rates would have touched $300 per barrel in 2018 too. Sieminski also warned that if the OPEC plus front of Saudi and Russia is not accepted and if any obstacles are created in its path, it will not be possible to stop the crude price rise. Sieminski pointed out that Saudi has the largest crude investment in OPEC and Russia, who is not an OPEC member, is the largest natural gas supplier to Europe.