Saudi Arabia and Russia support each other in the fight for the global oil market

In a rapidly changing geopolitical environment, Saudi Arabia and Russia are forging ahead, fostering closer relations in key sectors, including the energy sector. Recently, during a meeting in St. Petersburg, 6 major deals were signed between two of the world's leading crude oil producers. Deals range from defense agreements to expanded energy cooperation. They also include closer cooperation on nuclear power.

Al-Arabiya reports that Saudi Arabia plans to build 16 nuclear reactors, and Russia has agreed to play an important role in their operation. The country has already signed nuclear cooperation contracts with countries capable of building reactors, including the United States, France, Russia, South Korea, China and Argentina. Interestingly, during the visit, both sides, which usually seem to be competing, these days also announced the formation of a working group for joint energy projects.

Russian Energy Minister Novak said in St. Petersburg that his country, through a deal with Saudi Arabia, is not looking for a replacement for its existing oil and gas partners, but wants to create new ties. Given that the US and the EU, through sanctions, want to restrict the transfer of new technologies to oil and gas to the Russian state-owned company, Russia may be looking for enhanced oil recovery and advanced drilling technologies by cooperating with Saudi Arabia, especially when using old fields in Western Siberia, according to research centers. ... Saudi Aramco is today regarded as the world's largest investor in new oil and gas technologies.

But as Saudi Arabia and Russia expand their relationship, an interesting scenario emerges: They continue to compete in global oil markets facing glut. In May, Russian oil production reached a record level of 10.78 million barrels per day, which is quite close to the Soviet-era production in 1987 and significantly higher compared to 10.08 million barrels in May last year. In addition, Russia became China's top crude supplier in May with a record 3,920,000 tons of oil. Oil production in Russia will undoubtedly continue to put pressure on the global crude oil market. And the world's leading exporter of crude oil, Saudi Arabia, will also remain in top gear. According to OPEC statistics, Saudi Arabia rose to 10.3 million barrels per day in May 2015 against 9.69 million barrels a year earlier.