Julian Lee, Columnist

OPEC Emperor Saudi Arabia Has Fallen For Russia’s Tricks

An oily tale told for children, with apologies to Hans Christian Andersen.

February 23, 2020 at 6:00 AM UTC

Julian Lee is an oil strategist for Bloomberg. Previously, he was a senior analyst at the Centre for Global Energy Studies.

Russia’s oil output cuts are as real as the emperor’s new clothes, OPEC just can’t admit it.
Source: Culture Club/Hulton Archive

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As the Covid-19 virus hit demand for oil, OPEC kingpin Saudi Arabia wanted an urgent meeting among the cartel’s members and their international partners in order to bring in deeper and longer output cuts. Russia didn’t, and now the emergency gathering of the 23-nation coalition known as OPEC+ won’t happen. This is only the latest in a series of slights that the biggest member of OPEC’s allies has delivered to the wider group, ratcheting up questions about its potency to truly impact oil production levels and therefore prices.

So why does Saudi Arabia continue to tolerate the unwieldy situation in return for very little in the way of real output cuts? Here’s my take, with a bit of artistic license: