OPEC Has a New Best Friend: Russia

Putin has helped resolve conflicts within the cartel, giving the country considerable influence over oil markets

When the Organization of the Petroleum Exporting Countries met in Vienna in December, it was in danger of imploding.

Oil prices had plunged. Member states Iran, Venezuela and Libya were refusing to cut production. Qatar had quit. And U.S. President Donald Trump was pressuring Saudi Arabia to keep prices low.

With negotiations teetering on the brink of failure, rescue came from an unlikely place—Russia, which isn’t even an OPEC member. President Vladimir Putin agreed to cut Russian oil production in league with OPEC, provided that Iran was allowed to keep pumping.

The degree of acrimony that pervaded that critical meeting, and the critical role Russia played in resolving the crisis, hasn’t previously been reported. What happened behind closed doors in December was a pivotal moment in Russia’s transformation from a nation that didn’t cooperate with OPEC at all to one that has become an indispensable partner.

Saudi energy minister Khalid al-Falih recently joked that he talks more with his Russian counterpart Alexander Novak than with some of his colleagues in the Saudi cabinet. “We met 12 times in 2018,” he said of Mr. Novak at a news conference in March.

At the next OPEC meeting, scheduled for May, Russia and Saudi officials will discuss whether to formalize what has been until now an temporary alliance.

For decades, the U.S. has embraced Saudi Arabia as one of its close geopolitical allies, selling it arms and encouraging its role as a stabilizing force in the Middle East. In exchange, Washington has come to expect a stable supply of oil to global markets to help damp price spikes and to prevent harm to the U.S. economy.

With its new ally in Russia, Saudi Arabia is no longer beholden only to Washington.

Under Mr. Trump, the U.S. has altered its longstanding, hands-off approach to the cartel. Mr. Trump has repeatedly tweeted for OPEC to boost output to drive oil prices down, and he has phoned the Saudi government directly asking the kingdom to open the taps.

“The United States-Saudi Arabia relationship plays a critical role in ensuring Middle East stability and maintaining maximum pressure against Iran,” said a senior Trump administration official. “The U.S.-Saudi relationship remains strong.”

The murder of dissident journalist Jamal Khashoggi at the Saudi consulate in Turkey last October created a fresh rift between the Saudi kingdom and the U.S.—and provided an opening for Russia to insert itself further into OPEC.

.. Oil prices had cratered in 2016 and didn’t look likely to rebound. The three men needed to orchestrate a deal to reduce crude output to lift global prices. Russia and OPEC agreed to cut production.

By the middle of last year, crude was soaring again, thanks to lower output from OPEC and Russia and renewed prospects for global economic growth. By the end of the year, however, amid a U.S.-China trade battle, the world’s economic outlook was dimming.

As the December OPEC meeting loomed, oil prices had plunged some 30% in six weeks. The Saudis needed unanimous agreement on proposed production cuts to shore up prices. Iran, already hobbled by U.S. sanctions that began in November, was reluctant to curb its output. Libya and Venezuela, with domestic troubles of their own, also were holdouts.

With the cartel about to meet in Vienna, Qatar, Saudi Arabia’s neighbor in the Persian Gulf, shocked global oil markets by announcing it was leaving OPEC. It was among a small group of member countries that felt overshadowed as the Saudi-Russia alliance grew stronger. OPEC has become “basically all about what [Prince Mohammed] and his buddy Putin want,” says a Qatari official.

.. When Mr. Falih asked Iran to join the collective production cut, Iranian oil minister Bijan Zanganeh rejected the demand and blamed Persian Gulf countries for replacing Iran’s sanctioned oil. According to the people familiar with the conversation, he pointed his finger at Mr. Mazrouei, the Emirati minister in charge of the meeting, and said: “You are the enemy of my country.” Mr. Zanganeh then threatened to suspend Iran’s membership in OPEC, these people said. Spokesmen for the UAE and Saudi Arabia’s energy ministries couldn’t be reached for comment.

 .. Mr. Novak acknowledged that Russia would benefit from the cartel’s cuts. “We need $60 a barrel and we are under sanctions” from the U.S., OPEC officials recall him saying.When Mr. Falih re-entered the OPEC meeting room, he was beaming.

The coalition began curbing output in January. Oil prices have risen 30% since the beginning of the year, their best annual start since the early 1980s.

Saudi Arabia says it has trimmed more than it promised. Russia had pledged to curb production by 230,000 barrels a day, but in March it had slashed daily output by just 120,000 daily barrels, according to OPEC and Russian officials.

Saudi officials say Riyadh is willing to overlook Russia’s shortcomings because it needs support on the international stage. “We cannot afford to lose them,” says one Saudi official.

Jared Kushner’s Secret Meeting

Jared Kushner attends a secret meeting in Saudia Arabia with MBS that could benefit him and the Trumps.  This is how Trump deals with the man responsible for killing and dismembering Jamal Koshoggi.

The Republicans have said to ban all Muslims because they are a national security risk, but are fine with giving Saudi Arabia nuclear reactors.

Jared and the Saudi Crown Prince Go Nuclear?

There are too many unanswered questions about the White House’s role in advancing Saudi ambitions.

Jared Kushner slipped quietly into Saudi Arabia this week for a meeting with Crown Prince Mohammed bin Salman, so the question I’m trying to get the White House to answer is this: Did they discuss American help for a Saudi nuclear program?

Of all the harebrained and unscrupulous dealings of the Trump administration in the last two years, one of the most shocking is a Trump plan to sell nuclear reactors to Saudi Arabia that could be used to make nuclear weapons.

Even as President Trump is trying to denuclearize North Korea and Iran, he may be helping to nuclearize Saudi Arabia. This is abominable policy tainted by a gargantuan conflict of interest involving Kushner.

Kushner’s family real estate business had been teetering because of a disastrously overpriced acquisition he made of a particular Manhattan property called 666 Fifth Avenue, but last August a company called Brookfield Asset Management rescued the Kushners by taking a 99-year lease of the troubled property — and paying the whole sum of about $1.1 billion up front.

Alarm bells should go off: Brookfield also owns Westinghouse Electric, the nuclear services business trying to sell reactors to Saudi Arabia.

Saudi swamp, meet American swamp.

It may be conflicts like these, along with even murkier ones, that led American intelligence officials to refuse a top-secret security clearance for Kushner. The Times reported Thursday that Trump overruled them to grant Kushner the clearance.

This nuclear reactor mess began around the time of Trump’s election, when a group of retired U.S. national security officials put together a plan to enrich themselves by selling nuclear power plants to Saudi Arabia. The officials included Michael Flynn, Trump’s national security adviser, and they initially developed a “plan for 40 nuclear power plants” in Saudi Arabia, according to a report from the House Oversight and Reform Committee. The plan is now to start with just a couple of plants.

As recently as Feb. 12, Trump met in the White House with backers of the project and was supportive, Reuters reported.

No one knows whether Prince Muhammed will manage to succeed his father and become the next king, for there is opposition and the Saudi economic transformation he boasts of is running into difficulties.

Trump and Kushner seem to be irresponsibly trying to boost the prince’s prospects, increasing the risk that an unstable hothead will mismanage the kingdom for the next 50 years. Perhaps with nuclear weapons.