Russian strongman Vladimir Putin and Saudi Crown Prince Mohammed bin Salman are reportedly “satisfied” with oil markets after sharing a phone call over the weekend that’s sure to raise feathers in Washington..According to Russian state media, Putin and MbS (as he’s colloquially known) had a “friendly… constructive and informative” conversation on Friday in the wake of last month’s OPEC production cuts of about 1.2 million barrels per day (bpd). Russia, a member of the so-called OPEC+, chipped in with a half million bpd of its own..“With this in mind, it was agreed to build up contacts in specific areas of cooperation," according to a statement from the Kremlin..After sagging in the months after Russia’s invasion of Ukraine and multiple bank failures in the US and Europe, oil prices jumped about 5% on the news of the OPEC cut and have stabilized in the $80 range. Monday morning, North American benchmark West Texas Intermediate (WTI) was down about 40 cents to $77.64 while UK Brent was $81.34. The OPEC basket — a posted price that doesn’t trade — was going for about $84..That’s good news for Putin, who is relying on oil revenue to fund his faltering war efforts in Eastern Europe. Russian seaborne cargoes are under a fixed price cap of $60 and Russia has been looking for new buyers as the EU attempts to wean itself off Putin’s crude dependency..Despite the bans, Russia has emerged as the top oil supplier to India — the world’s third largest importer after China according to a Reuters analysis. Ironically, the US was the planet’s largest importer — at some 6.1 million bpd — while simultaneously being its largest producer. .Which underscores why President Joe Biden travelled with cap in hand to visit MbS in Riyadh last October to urge the Saudis to pump more oil. Instead, they’ve cut almost 3 million bpd since then, straining relations..Saudi has also cozied up to China in recent weeks after joining the Shanghai Cooperation Organization — along with India — prompting speculation that it is teaming up with Biden’s geopolitical rivals to displace the US dollar as the default currency for crude oil payments..Although MbS, Saudi’s de facto ruler until he ascends the throne, is known for being petulant and testy — he didn’t appreciate being singled out by Biden for the murder of Washington Post reporter Jamal Ahmad Khashoggi — analysts have speculated that he has legitimate business reasons for chumming up to China as oil demand flattens and ultimately dwindles in the US and the EU. OPEC has almost always had a policy of defending market share and will face increasingly stiff competition from the US as its production continues to rise and domestic demand goes down, freeing up more of its own barrels for export.."OPEC's output cut decision is helping Russia as well," Refinitiv analyst Ehsan Ul Haq, told Reuters adding the planned supply cut has lifted global oil prices and at the same time narrowed the discounts for Russian oil against Brent..Although global oil prices were generally lower in morning trade, Canadian benchmark Western Canadian Select was actually up about 50 cents, to $56.52.
