A lasting oil alliance

A lasting oil alliance:

"The Group of 20 summit of September 2016 at Hangzhou in China, a quick 45-minute ride by high-speed rail from Shanghai, was marked at the time by world leaders’ hand-wringing over the future of globalisation. With the benefit of hindsight, it is clear that the most significant0 event at the summit was a meeting on the sidelines between Khalid al-Falih, energy minister of Saudi Arabia, and Alexander Novak, his Russian counterpart. After that encounter, the two men issued a joint statement saying they had agreed to to “act jointly or with other producers” to stabilise world oil markets. They did not commit to any immediate action, but the meeting planted the seed of a new alliance that bore fruit at the end of the year, in the deal to cut oil output agreed by Opec and leading non-Opec producers. The Joint Ministerial Monitoring Committee, intended to supervise compliance with that agreement, met in Muscat last weekend. Mr Falih and Mr Novak took the chance to attest to the continuing warmth of their relationship by giving a joint interview to Bloomberg, in which they looked forward to a long-term alliance beyond the scheduled end of the oil production curbs in December. Mr Falih said he wanted to formalise a framework for keeping contacts between Opec and non-Opec oil producers, to find a way “to get together quickly and not wait [for] a year of negotiations and deliberations” if they are worried about falling oil prices in the future. Mr Novak agreed that the world’s two largest oil producers had to work together, and said: “We assume that co-operation between our countries is long-term.” Speaking on CNBC at the World Economic Forum in Davos later in the week, Mr Falih waxed lyrical, saying he expected the oil alliance with Russia to last for “decades and generations”. In a panel session at the same event, he said oil producers “should not be scared” about the renewed growth of the US shale industry, adding: “In the overall global supply demand picture, it’s not going to wreck the train”. Bolstered by Mr Falih’s comments at the weekend, and by the weaker dollar, oil prices rose, with Brent crude breaking above $71 a barrel for the first time in three years."



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