Russia persuades OPEC to cut production
On July 1 OPEC + decided to prolong its production cut. The reduced production agreement will now last 9 months into 2020.At the G20 meeting in Osaka, Japan the Russian Government declared its intention to reduce oil production.Since December 2016 Saudi Arabia and Russia have agreed production cuts. This has left other OPEC + countries little choice but to acquiesce. Russia is not a member of OPEC but chooses to co-operate with it. That is why people speak of OPEC + meaning 'OPEC plus Russia'. This arrangement gives Russia considerable sway in the Middle East. Russia's relationship with Saudi Arabia could play a vital role in the Iran Crisis. Saudi Arabia has been cutting production by more than it needs to in order to comply with the OPEC + agreement. Russia cut 50 000 barrels more than it needed to in June because of difficulties with the Druzhba Pipeline. The pipeline was contaminated with organic chlorides. Sanctions on Iran have been a godsend for Russia. This has reduced global supply by hundreds of thousands of barrels of oil. Iran tends to produce medium sour crude. Russia's Ural blend is a good alternative. It is very much in Russia's interests that such sanctions on Iran should be extensive and should run as long as possible. However, Moscow is not so tactless as to say so. The Russians manage to have a cordial relationship with Iran just as they do with Saudi Arabia. In Syria the Iranians and the Russians are brothers in arms. The Iranians have publicly complained about the Moscow-Riyadh duopoly which effectively runs OPEC+. Iran has no firm friends and cannot afford to alienate Russia which is why Teheran no more than grumbles.