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Russian President Vladimir Putin and Saudi Crown Prince Mohammed bin Salman reportedly met to discuss a boost in oil production before Russia’s 5-0 hiding of Saudi Arabia in the opening game of the World Cup yesterday. The leaders of the two largest oil exporters discussed their petro-alliance and how they could continue to control oil production in light of US sanctions on Iran and the collapse of the Venezuelan oil industry. Both countries appear to want to increase oil output gradually, which could ease some of the upward pressure on energy prices. But there is little agreement on the exact volume and timing of production increases. Any agreement could also be complicated by ongoing geopolitical issues. The relationship between Russia and Saudi Arabia has been complicated by a number of issues around the world. In many ways, their partnership is very unlikely. Russia acts as a key military partner with Iran, Saudi Arabia’s major regional rival. Qatar, another of Saudi’s enemies, is a major foreign investor in Russian energy. The two countries are also at odds on their relationship with the United States. But both countries benefit from their oil arrangement, which has helped improve the Russian budget and given Saudi Arabia a say on certain regional issues and conflicts. The Russian-Saudi discussion takes place before a full OPEC meeting in Vienna on June 22 – an event that energy traders will be watching closely. There are opposing views across the oil cartel. Iran showed this divide on Wednesday when a senior official said that current production was acceptable, and the group should not bow to pressure from the United States. President Donald Trump took to Twitter on Wednesday to attack the Organization of Petroleum Exporting Countries (OPEC) for inflating prices. "Oil prices are too high, OPEC is at it again. Not good!,” the president tweeted.

Stifling production

Russia and Saudi Arabia made an unlikely alliance in 2016, when non-OPEC Moscow agreed to join the bloc in cutting production. The OPEC+ agreement cut supply by 1.8 million barrels a day and increased prices from a significant low point. Since then prices have increased to around $80 per barrel, which has had a corresponding increase on gas and electricity prices. Recent market uncertainty, particularly uncertainty surrounding US sanctions on Iran and Venezuela’s political situation have forced wholesale gas and electricity prices higher still. A US-supported oil deal between Saudi Arabia and Russia could take some of the edge of these year-long price increases. As part of a World Cup diplomacy run, Putin has held an audience with leaders from Azerbaijan, Rwanda, Bolivia, Lebanon and Armenia. He is expected to meet leaders from Moldova, Kyrgyzstan, Uzbekistan, Panama and two internationally unrecognised countries. So far, no major Western leaders have RSVPd to the Kremlin. French president Emmanuel Macron said he would visit the country if the French national team progressed in the competition.