MOSCOW, March 11. /TASS/. The collapse in oil prices and global financial markets was caused by the actions of Saudi Arabia and Washington to destabilize the political situation in Russia, according to experts interviewed by TASS on Wednesday.
Speaking in the State Duma, lower house of parliament, on Tuesday President Vladimir Putin said that Russia would be able to decently go through the period of instability due to turbulence and the threat of coronavirus spread.
"I am absolutely confident we will pass through this period, pass decently. The economy will become stronger on the whole and critical production branches will be more powerful and competitive," the head of state said.
The experts interviewed by TASS analyzed what caused the price collapse. Most of them agree that these were Saudi Arabia, which ignored Russia's constructive position to extend the OPEC+ deal and the worsening macroeconomic situation that brought down the global oil and financial markets. According to them, the demarche of Saudi Arabia was not accidental, since its actions are aimed at destabilizing the market in its own interests and the interests of the U.S. Riyadh and Washington deliberately manipulate oil prices and the exchange rate trying to squeeze Moscow out of the global energy market.
Saudi Arabia’s goals
According to the program director of the Valdai international discussion club Oleg Barabanov, the actions of Riyadh are dictated by internal political and geopolitical reasons.
"At first glance, the actions of the Saudis look irrational: amid the worsening macroeconomic situation and a fall in global oil demand, Riyadh, in fact, deliberately ignored Russia's compromise position, which proposed extending the agreement with existing quotas and continuing to accurately monitor the market situation. Even on the eve of the meeting of the countries participating in the agreement, Saudi Arabia showed an unconstructive and tough position, working deliberately towards disruption of an agreement. However, if you look at the situation from the perspective of Saudi Arabia’s internal political interests, the actions of Crown Prince Mohammad bin Salman Al Saud no longer seem so meaningless," the expert said.
"The king of Saudi Arabia is sick, the country will have a change of head of the state, and the popularity of the crown prince is falling. Social tension in the country is growing and it is important for the authorities to avoid unrest at any cost. In this situation, the provoked crisis in the oil market and the ensuing panic allowed Muhammad to carry out a number of tough political decisions, such as the arrest of several members of the royal family who are in opposition and thus strengthen his own political positions," Barabanov explains.
Beneficiaries of the transaction
According to Alexander Frolov, Deputy Director General of the National Energy Institute, in the geopolitical arena, Saudi Arabia has historically played on the side of the United States, and these two countries have become the main beneficiaries of the OPEC+ deal.
"Initially, Russia and Saudi Arabia made a deal to stabilize prices when the cost of hydrocarbons was at a minimum," he continued.
"However, the deal very quickly turned into an expansion tool for American shale companies. Maintaining high oil prices ensured the profitability of American shale oil production, the opportunity to complete the creation of export infrastructure and enter new large markets."
The expert recalled that leading US oil companies such as ExxonMobil and Chevron received more than $50 billion from the OPEC+ deal since 2016, US oil exports increased five-fold over the term of the agreement and production increased from 8.9 mln barrels per day to 13.1 mln barrels per day. "Saudi Arabia, in turn, thanks to the OPEC + deal, was able to successfully conduct a strategic deal to publicly place shares of Saudi Aramco and to ensure the implementation of an ambitious program of social and economic reforms in the country. For Russia, the OPEC + deal essentially became a voluntary withdrawal from the market, which entailed the loss of potential income, " he added.