Image Credit: The Mind Unleashed
By Whitney Webb | The Mind Unleashed
On Wednesday, Reuters reported the details of a private and “secret” deal reached between Russia and Saudi Arabia, a deal that was aimed at increasing oil output in order to offset the coming shock to oil prices that will follow U.S. efforts to starve Iran of its oil revenues. Notably, Reuters also noted that the deal was struck with cooperation from the United States, even though Russia had publicly attacked the U.S.’ targeting of Iran via sanctions and had pledged to help protect Iranian trade to help keep the country’s economy afloat.
The private deal was reached in September between Saudi Energy Minister Khalid al-Falih and his Russian counterpart Alexander Novak, along with coordination from U.S. Energy Secretary Rick Perry. One of the sources that spoke to Reuters asserted that “the Russians and the Saudis agreed to add barrels to the market quietly with a view not to look like they are acting on Trump’s order to pump more.” The deal was struck as oil prices began to climb towards $80 per barrel. The oil price currently stands at just over $84.
Russia’s involvement in the deal may seem surprising given that Russia publicly vowed in August to do “everything necessary” to protect its shared economic interests with Tehran — including the estimated $50 billion in Russian investments in Iran’s oil sector that Russia has said will continue despite U.S. plans to sanction the Iranian oil and gas sectors beginning on November 4.
The revelation that Russia worked privately with the Saudis “on Trump’s order” to aid the U.S. effort to halt Iranian oil exports without causing a supply shock seems to contradict Russia’s public promise to defend Iran’s economy against aggressive U.S. sanctions. Indeed, by helping the U.S. to avert a supply shock following the November 4 deadline, Russia may actually enable the U.S.-led sanctions campaign to be successful and longer lasting than it would be without Moscow’s support.
The U.S. decided to impose the sanctions after unilaterally withdrawing from the Iran nuclear deal, or Joint Comprehensive Plan of Action (JCPOA), in a move that was rejected by the deal’s other signatories.
Russian Motives for Aiding the U.S. and the Saudis
While Russia’s involvement in brokering this no-longer-secret deal with the Saudis seems to contradict its own geopolitical interests and public statements, there are a few motives that seem to explain the Russian decision to aid the U.S. effort to offset a coming supply shock resulting from the removal of Iranian oil from the global market.
On the one hand, Russia’s oil sector stands to benefit economically by increasing its oil exports and thus increasing sales. This push to up supply at the U.S.’ behest has already had lucrative consequences for the Saudis, so it is likely that economics and the promise of increased oil sales may have pushed Russia to cooperate in private with the U.S. effort to increase the oil supply from countries other than Iran.
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