Saudi Arabia is Losing Patience with Kremlin’s and White House’s Roles in Undermining OPEC Efforts

Crude oil is sliding again, despite a series of Draconian production cuts, imposed by OPEC+ since the beginning of this year. Thus, at the time of writing on Friday, June 9, a barrel of ICE Brent oil futures is trading at $76.20, after yesterday’s drop by 3%, while the same amount of WTI crude is hovering around the still-low figure of $71.56.

According to Washington Post, in public, the Saudi government defended its actions politely via diplomatic statements. But in private, Crown Prince Mohammed bin Salman threatened to fundamentally alter the decades-old U.S.-Saudi relationship and impose significant economic costs on the United States if it retaliated against the oil cuts. The latest news is that the crown prince claimed “he will not deal with the U.S. administration anymore,” the document says, promising “major economic consequences for Washington.”

Last Sunday, Saudi Energy Minister Prince Abdulaziz bin Salman said that the Arab country's additional cut of 1 million bpd could be extended beyond July “if needed”, and now, in light of the above numbers, this option looks more and more realistic. We see that the recent months' oil market destabilizing actions, including multiple releases of SPR by Biden administration, imposition of oil price caps, as well as uncharacteristically vocal reactions to OPEC’s attempts to protect own interests – all these literally created the situation of tug of war.

Meanwhile, according to Oilprice.com, tanker-tracking data monitored by Bloomberg showed, that Russia’s seaborne crude oil exports continued to stay high as the latest 4-week average shows that shipments are inching up, much to the frustration of its partners in the OPEC+ deal. In the four weeks to June 4, the 4-week average Russian crude exports by sea rose to 3.73 million barrels per day (bpd), up from a revised 3.68 million bpd in the 4 weeks to May 28.

Russian crude oil shipments were 1.4 million bpd above the level from the end of 2022, more than can be accounted for by Germany and Poland stopping Russian crude imports by pipeline, or lower refinery throughput.