• / Free eNewsletters & Magazine
  • / My Account
Home>UPDATE: What Putin and Saudi king's buddy act means for the oil market

UPDATE: What Putin and Saudi king's buddy act means for the oil market

UPDATE: What Putin and Saudi king's buddy act means for the oil market

10/06/2017

By William Watts, MarketWatch

Putin, Saudi king meet as Russia signals openness to extending oil output curbs

Russian President Vladimir Putin staged a lavish welcome (https://www.wsj.com/articles/putin-saudi-king-explore-deeper-cooperation-1507224720) for Saudi Arabia's King Salman on Thursday, cementing a relationship that could have long-lasting effects on the global oil market.

A warming relationship between Moscow and Riyadh has seen Russia, which isn't a member of the Organization of the Petroleum Exporting Countries, join a Saudi-led effort by the cartel to cut crude oil output by nearly 1.8 million barrels a day this year in an effort to rebalance the global market. The Moscow meeting between the two leaders is seen by analysts as a venue to deepen the relationship and, in the near term, allow the Saudis to nudge Russia toward extending the pact.

Indeed, Michael Tran, commodities strategist at RBC Capital Markets, said in a note that coordination on oil policy is perhaps the "biggest deliverable" to result from the relationship, "with Russia abandoning its longstanding aversion to cooperating with OPEC and essentially assuming the role of de facto co-president this year." (See chart above.)

In addition, Putin looks like he's not about to give up the "co-pilot" role soon, Tran wrote, with Russia signaling it might be willing to extend the agreement to the end of 2018.

That signal helped buoy crude-oil futures (http://www.marketwatch.com/story/oil-prices-stabilize-after-us-production-hits-july-2015-highs-2017-10-05) on Thursday, traders said, with Brent crude , the global benchmark, rising $1.28 in London, and West Texas Intermediate crude , the U.S. benchmark, rising 93 cents to $50.91 a barrel.

-William Watts; 415-439-6400; AskNewswires@dowjones.com

©2017 Morningstar Advisor. All right reserved.