In order to make significant decisions time is needed and the environment must be appropriate. In addition, the choice of partners with which common objectives are to be achieved goes through a long period of observation and scrutiny…
Oil market stability is important for a large number of players, but those who are the major exporters are obviously more concerned, and their burden is heavier. Thus, although Energy Ministers do have very important responsibilities, the final strategic decision is a political one and has to be taken by the respective Heads of State.
However, in some very important oil producing and exporting countries governments simply have no control over their respective hydrocarbon industries. In spite of the very strategic and vital importance to national interest considerations, the private sector has its own interests and calculations and thus cannot be forced down a pre-defined road. Nations with these conditions do not qualify to be part of the international agreements needed to furnish the oil market with the required stability.
So, it is from this point of view that one could gain a better grasp of the importance and scope of the very recent understanding reached by the two major oil exporters, Saudi Arabia and Russia. This is crucial not just for both countries but rather for the whole oil industry that is countries, companies, organizations…
Once policies are put in place with regard to the price of oil, this will certainly be felt on the supply side and will have an effect on inventories.
OPEC, of which Saudi Arabia is a prominent founding member, seems to be in a different position from now on, as finally Russia joins the process of assessing the price that is considered by both governments as the most convenient to ensure healthy growth rates of the world economy.
If this is looked at carefully, then it is not a completely new objective when compared to the Resolutions approved on the 14th of September 1960 when OPEC was born.