Putin to visit Saudi Arabia, UAE after OPEC+ deal hits market 'inertia'

Russian president Vladimir Putin will visit OPEC+ allies the UAE and Saudi Arabia on Dec. 6, the Kremlin said on its website, with talks expected to focus on OPEC+ cooperation and Middle East tensions, as the producer group struggles to make headway on boosting oil prices.

Putin will be accompanied on the one-day trip by top officials including Deputy Prime Minister Alexander Novak, who coordinates ties with OPEC+, and central bank chief Elvira Nabiullina, as well as business leaders, likely including Lukoil's founder and former chairman Vagit Alekperov, Kremlin foreign policy adviser Yury Ushakov was quoted by Russian media as saying. Alekperov was historically a regular attendee at OPEC meetings before the creation of the OPEC+ group, led by Moscow and Riyadh.

The visit will be immediately followed by talks in Moscow between Putin and Iranian president Ebrahim Raisi on Dec. 7, Iranian state television reported.

The Kremlin said Putin would first visit the UAE to meet President Mohammed bin Zayed and discuss bilateral ties "and the current international situation, with a focus on the situation in the Middle East."

Putin then travels to Riyadh for talks with Crown Prince Mohammad bin Salman, covering "trade, economic and investment themes, and various aspects of cooperation in multilateral formats, as well as an exchange of views on questions on the regional and international agenda."

The major Russian diplomatic visit comes as the latest effort by OPEC+ to boost oil prices with additional output cuts was seen as struggling to make its mark. It also coincides with the UAE's hosting of the UN Climate Change Conference in Dubai. The Kremlin website gave no indication that Putin would attend the event.

The OPEC+ alliance on Nov. 30 committed to slashing more than 2 million b/d of production through the first quarter of 2024, including a rollover of Saudi Arabia's 1 million b/d cut that has been in place since July, and Russia deepening its export reduction from 300,000 b/d to 500,000 b/d.

Kremlin spokesman Dmitry Peskov acknowledged the lackluster impact of the measures on Dec. 5, saying market processes were subject to "inertia" and efforts to bolster the market sometimes had a "delayed" effect, in comments quoted by Ria Novosti.

Platts Dated Brent North Sea benchmark was assessed at $78.25/b on Dec. 4, continuing a broadly downward trend since late September.

Mideast alliances

Russia's involvement in OPEC+ has helped it cope with major costs related to its war in Ukraine and wide-ranging international sanctions. Platts, part of S&P Global Commodity Insights, assessed Russia's key crude grade Urals at a discount of $15.5/b to Dated Brent on Dec. 4. At times since the Russian invasion the discount has been more than $40/b.

The visit to Moscow the following day by Iran's president underlines Russian efforts to play a role in wider Middle East diplomacy as well as the two countries' shared interest in blunting international sanctions.

Iran, though a fierce rival of Saudi Arabia, has close ties with Moscow and is considered a key protagonist in current Middle East tensions, while also providing materiel for Russia's war effort in Ukraine.

Recent attacks on civilian and naval shipping in the Red Sea and Gulf of Aden have threatened maritime trade and heightened fears of a wider conflict stemming from the Hamas-Israel crisis.

Russia's role in global energy supply was lambasted by Geoffrey Pyatt, assistant secretary at the US State Department.

Speaking at the Atlantic Council's Global Energy Forum in Dubai on Dec. 5, Pyatt said: "Russia is never again going to be viewed as a reliable energy supplier. And we have maintained trans-Atlantic unity in our price cap coalition, on the principle that we will deny Russia the fossil energy resources that it used [for] this terrible war against the people of Ukraine. It's been my priority here [at COP28]."