IISS: Russia failed its oil adventure

Russia's agreement to radically reduce oil production under the new OPEC + deal is evaluated differently. Nigel Gould-Davis, an expert at IISS (International Institute for Strategic Studies), a senior fellow for Russia and Eurasia, considered this a major economic and political defeat.

According to the author, the refusal to extend the deal in Vienna on March 6 was a big mistake, guilty of which was Igor Sechin, the head of Rosneft and Putin’s closest ally, who insisted on trying to bring bankruptcy of the US shale oil industry to bankruptcy. Earlier, in 2015, Saudi Arabia could not cope with the same task.

The results of this ill-conceived decision were extremely negative. After refusing to extend the deal by Russia, the Saudis increased oil production and staged massive dumping. The price collapse began, but the Kremlin was counting on its reserves of $ 580 billion and the NWF, whose assets amounted to 150 billion. Due to them, Moscow intended to hold out for six years. Instead, Russia made concessions to OPEC + after only six weeks of low oil prices.

Besides economic losses, the Kremlin suffered a serious political defeat in several directions, points out Nigel Gould-Davis.

At first, through its actions, Moscow ruined relations with Riyadh and all its Middle Eastern diplomacy, which had only before been established. In 2017, their culmination was the visit of Salman bin Abdel Aziz al-Saud to Moscow.

Secondly, the key role in organizing the new OPEC + deal was played by the United States, which itself did not join it. Thus, the United States demonstrated that it is they, and not Russia, that are the real "energy superpower." For Washington, oil is only one sector of the economy; for Moscow and Riyadh, it is the main source of income.

ThirdlyHaving returned to the negotiating table in just six weeks instead of six years, the Kremlin showed the whole world its weakness and readiness to make unprofitable concessions for itself, which could encourage the US Congress to introduce new anti-Russian sanctions in the future.

The IISS expert concludes that the Kremlin’s decision to “bankrupt the American shale industry” is an example of an opaque personalistic policy that has ultimately done serious damage to Russia's economic political interests.
  • Photos used: https://pixabay.com/
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  1. Vladimir_ Voronov (Vladimir) April 28 2020 16: 39
    The author would like to recall two truths:
    1. "Everything is learned in comparison", and for any of the International Institute for Strategic Studies, Russia, in principle, cannot defeat the United States.
    2. "Chickens are counted in the fall." Too many, including Western experts, do not predict anything good for the United States and even disintegration. There is not much to wait.
  2. Arkharov Offline Arkharov
    Arkharov (Grigory Arkharov) April 28 2020 17: 25
    Well, what is there to refute?
  3. The comment was deleted.
  4. boriz Offline boriz
    boriz (boriz) April 28 2020 17: 47
    Shale oil (and, in the short term, gas) has almost been killed. Small, often simply family-owned companies deal with oil shale. Another six months and the khan is irrevocable to them. Traditional wells can be easily re-opened and pumped further, while in shale wells, high pressure. If you stop downloading, it will stupidly fall and you need to start all over again, and whether this is possible is not at all a fact. It is necessary to pump another portion of poison into the ground. And what kind of oil will be there?
    Large companies work on traditional oil, they are still struggling, although prices there are also lower than cost. Everything is more or less clear with the USA, the goals are close to achievement.
    And KSA, having a lot of fun, ran to borrow money. Will they give? Just in case, expenses have already begun to be reduced.
    If you wish, you can give money and equipment to the Hussites and they will cover the KSA oilfields with missiles and drones. All KSA oil, by a strange coincidence, is located on the lands that KSA took from Yemen in the year 1936. And the Yemenis, for some reason, did not forget this.
    The population of KSA is Sunnis. But in the east (just in the area of ​​oil fields) Shiites live, as in Yemen. By a strange coincidence, Shiites also live in Iran, and Iran regards KSA as it does to Israel. And he helps the Hussites. Well, and that there are a lot of Soviet / Russian equipment and weapons there, so where is it not?
    So, Russia does not even have to get their hands dirty. Well, they will provide Iran, confidentially, some help ...
    1. monman Offline monman
      monman (Garik Mokin) April 29 2020 05: 46
      Traditional wells can be easily re-opened and pumped further, while in shale wells, high pressure.

      Quite the opposite - traditional wells cannot be closed, because opening will take a lot of time / attendants. And the shale ones are simply closed with a “faucet” - pressure will not drop, because oil has nowhere to go, it is locked with oil shale.

      Such wells can be launched relatively quickly with a favorable price situation or, for example, in the case of the start of a new oil pipeline in this area. Production volumes at these wells do not correlate with the operation of drilling rigs.

      In addition, Congress is considering buying up the assets of oil shale companies. So, in the event of a favorable situation for shale workers (a year, two, three), the state will return their assets to them with a small% in their favor. Everyone is happy, amicably leading a round dance ...
      1. GRF Offline GRF
        GRF April 29 2020 08: 40
        Bought, bought at a small%, everyone is happy ... I smell it, you don’t agree on the nuances that will fall on someone’s fragile shoulders, otherwise what’s the extra cost ...
        1. monman Offline monman
          monman (Garik Mokin) April 29 2020 14: 06
          When in 2008 the state bought General Motors, and after 6 years, GM returned the money to the state with 9%, then the state earned well !!!
          By the way - Ford himself got out.
  5. Alexander Semenov (Alexander Semenov) April 28 2020 18: 04
    May will show everything!
  6. The comment was deleted.
  7. shadow Offline shadow
    shadow April 28 2020 22: 22
    But a bunch of tankers near America with Saudi oil, which the Saudis cannot sell, where are they doing?
    1. Rusa Offline Rusa
      Rusa April 30 2020 13: 02
      They crowded around California, others drifting aimlessly.
  8. Sergey Latyshev Offline Sergey Latyshev
    Sergey Latyshev (Serge) April 28 2020 22: 50
    And next to an article with completely opposite conclusions, haha.
    The advantages of Russia in the economic war with Saudi Arabia are named.
    Experts anneal.
  9. Alfred Offline Alfred
    Alfred (Alfred Mursaliev) April 29 2020 06: 32
    What nonsense ??? !!!
  10. 69 Offline 69
    69 April 29 2020 08: 48
    Quote: cmonman
    Traditional wells

    What makes you so worried about an emigrant Zionist?
  11. kriten Offline kriten
    kriten (Vladimir) April 29 2020 12: 00
    Shale workers are most affected, but has Russia suffered? Stupidity or propaganda.
    1. radiootdel4 Offline radiootdel4
      radiootdel4 (Vladimir) April 30 2020 15: 37
      This is an alternative reality.
  12. radiootdel4 Offline radiootdel4
    radiootdel4 (Vladimir) April 30 2020 15: 37
    An article in the style of "Everything is gone in Russia-oh-oh-oh".
    These ... so restless - either the Russian economy will be torn to shreds, or will be called a gas station. Now "the Kremlin has demonstrated its weakness to the whole world" and forced the Saudis to cut production, and the SGA shale producers to go bankrupt. And in general, now wait for new sanctions. And in the SGA everything will be fine, but in Russia it will be bad. But the worst thing (they forgot to indicate in the article) is that we do not know how to make smartphones with especially rounded corners.