Oil giants Russia and Saudi Arabia's efforts to extend a deal, which is aimed at cutting supply for another 10 to 20 years to drive up prices, won’t scare off surging U.S. shale production, experts say.
But a long-term pact by the world's top two crude oil producers would effectively formalize an alliance between them, strengthening Moscow’s position in the Middle East, where the U.S. has long been the dominant superpower.
“This would no longer be an agreement, but rather a permanent relationship,” said Ellen Scholl, deputy director at the Atlantic Council’s Global Energy Center. “From Russia’s perspective, I would assume this is a part of broader competitive front against the U.S. You see the U.S. nipping at the heels of the Russians and Saudis as the dominant crude producers in the world, which certainly changes things. But if you look at where the U.S. is and projecting to go, it will continue to remain one of biggest suppliers into international markets, regardless of what the Saudis and Russians do.”
Crude oil prices have recovered to $70 per barrel from below $30 in 2016, but energy experts say the historic surge in U.S. output could limit the price increase. The U.S. is anticipated to experience "explosive growth" in oil production in 2018 and will surpass Saudi Arabia's output for the first time, the International Energy Agency reported in January. The U.S. is expected to reach a historic high above 10 million barrels of oil production per day, an amount that would overtake Saudi Arabia and rival Russian oil production.
Wonder how long this love affair will last?
The Saudis are now working with Israel, their long time most hated enemy. They have united because of a joint fear of Iran, which is the biggest scourge on the planet right now. Iran is the main, perhaps only, supporter of Hezbollah and Hamas that threaten Israel.
And Iran is strongly supported by Russia....airplanes, advanced radar systems, ships, air cover in Syria, troops in Syria and more. Israel has bombed Hezbollah in Syria many times and even attacked some Iranian positions in Syria. No doubt some Russians were killed in those attacks.
The Saudis have reportedly given permission for Israeli overflights. They have been reported to have been planning joint strikes on Iran itself. The Jerusalem Post just reported that Israel has flown F35s into Iran that went undetected, thus showing that the Russian radar system is useless, a huge embarrassment for Putin.
Hard to believe that the Saudis and Russia are going to be good buddies for very long.