Russia offered oil deal for Syria
The revelations come amid high tension in the Middle East, with US, British and French warships poised for missile strikes against Syria, and Iran threatening to retaliate.
The strategic jitters pushed Brent crude prices to a five-month high of $US112 a barrel. "We are only one incident away from a serious oil spike. The market is a lot tighter than people think," Chris Skrebowski, editor of Petroleum Review, said.
Leaked transcripts of a behind-closed-doors meeting between Russia's Vladimir Putin and Saudi Prince Bandar bin Sultan shed an extraordinary light on the hard-nosed realpolitik of the two sides.
Prince Bandar, head of Saudi intelligence, allegedly confronted the Kremlin with a mix of inducements and threats in a bid to break the deadlock over Syria. "Let us examine how to put together a unified Russian-Saudi strategy on the subject of oil. The aim is to agree on the price of oil and production quantities that keep the price stable in global oil markets," he is claimed to have said at the four-hour meeting with Mr Putin.
"We understand Russia's great interest in the oil and gas in the Mediterranean from Israel to Cyprus. And we understand the importance of the Russian gas pipeline to Europe. We are not interested in competing with that. We can co-operate in this area," he said, purporting to speak with the full backing of the US.
The talks appear to offer an alliance between the OPEC cartel and Russia, which together produce more than 40 million barrels of oil a day, or 45 per cent of global output. Such a move would alter the strategic landscape.
The details of the talks were leaked to the Russian press. A more detailed version has since appeared in the Lebanese newspaper al-Safir, which has Hezbollah links and is hostile to the Saudis.
Al-Safir said Prince Bandar pledged to safeguard Russia's naval base in Syria if the Assad regime is toppled, but he also hinted at Chechen terrorist attacks on Russia's Winter Olympics in Sochi if there is no accord. "I can give you a guarantee to protect the Winter Olympics next year. The Chechen groups that threaten the security of the Games are controlled by us," he allegedly said.
Prince Bandar went on to say that Chechens operating in Syria were a pressure tool that could be switched on and off. "We use them in the face of the Syrian regime but they will have no role in Syria's political future."
Mr Putin has long been pushing for a global gas cartel, issuing the "Moscow Declaration" last month to "defend suppliers and resist unfair pressure".
Mr Skrebowski said it was unclear what the Saudis could really offer the Russians on gas, beyond leverage over Qatar and others to cut output of liquefied natural gas.
Saudi Arabia could help boost oil prices by restricting its own supply. This would be a shot in the arm for Russia, but it would be a dangerous strategy if it pushed prices to levels that put the global economic recovery at risk.
He said trouble is brewing in supply states. "Libya is reverting to warlordism. Nigeria is drifting into a bandit state with steady loss of output. And Iraq is going back to the sort of Sunni-Shiite civil war we saw in 2006-07," he said.
The Putin-Bandar meeting took place three weeks ago. Mr Putin was unmoved by the Saudi offer. "We believe that the Syrian regime is the best speaker on behalf of the Syrian people, and not those liver eaters," he said, referring to footage showing a rebel eating the heart and liver of a Syrian soldier.
Prince Bandar said that there can be "no escape from the military option" if Russia declines the olive branch. Events are unfolding exactly as he foretold.
Frequently Asked Questions about this Article…
The article reports that Saudi Arabia secretly offered Russia a sweeping deal to coordinate on oil prices and production — effectively aiming to control the global oil market — and to safeguard Russia's gas contracts if the Kremlin stepped away from the Assad regime in Syria, according to leaked transcripts of a meeting between Prince Bandar and Vladimir Putin.
According to the article, an alliance between Saudi Arabia and Russia could be powerful because OPEC plus Russia together produce over 40 million barrels a day (about 45% of global output). Coordinated cuts or agreed production targets could stabilize or lift oil prices, while Saudi supply restraint could boost prices — though the article warns such a strategy could push prices high enough to threaten the global economic recovery.
The article links the Brent crude spike (about US$112 a barrel) to heightened Middle East tensions — including US, British and French warships preparing for possible strikes against Syria and Iran's threats to retaliate. An energy analyst quoted in the piece warned the market is tighter than people think and that the market could be 'one incident away from a serious oil spike,' a signal investors should watch when assessing oil exposure and price volatility risk.
The article cites an analyst saying trouble is brewing in several supplier states: Libya is reverting to warlordism, Nigeria is drifting toward a bandit state with steady output losses, and Iraq risks returning to Sunni-Shiite conflict similar to 2006–07. These disruptions can tighten global supply and put upward pressure on oil prices, a key consideration for investors in energy markets.
Yes. The piece notes Vladimir Putin has been pushing for a global gas cartel and issued a 'Moscow Declaration' to defend suppliers. Prince Bandar reportedly acknowledged Russia's interest in Mediterranean gas and the importance of Russia's pipeline to Europe, and suggested Saudi Arabia could cooperate rather than compete — though the article says it's unclear what Saudis could practically offer on gas beyond political leverage over LNG producers like Qatar.
The article states that Putin was reportedly unmoved by Prince Bandar's offer. Putin is quoted as saying he believed the Syrian regime represented the Syrian people best and he dismissed the opposition, rejecting the olive branch implied by the Saudi proposal.
Yes. The leaked transcripts published in the article claim Prince Bandar offered to safeguard Russia's naval base in Syria if Assad fell, but also allegedly hinted that Saudi-linked Chechen groups could be used to threaten Russia’s Winter Olympics in Sochi as leverage if there was no agreement. He reportedly described Chechens in Syria as a pressure tool that could be switched on or off.
Based on the article, investors should recognise that geopolitical manoeuvring between major producers can quickly affect oil and gas prices. The prospect of coordinated Saudi-Russian action, ongoing Middle East tensions, and supply risks in countries like Libya, Nigeria and Iraq make the market tighter and more susceptible to price spikes. That suggests monitoring geopolitical news and oil market indicators is important when managing exposure to energy assets.
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