- President Zelensky was back in Saudi on Sunday to discuss his peace plan at a key international summit involving 40 countries. Saudi has been cutting oil production, propping up prices, which is a boon to the Russian war economy. Nonetheless, hosting Zelensky gives Saudi Arabia the opportunity to act as an influential middle power in the multipolar world order while also giving the Ukrainian president the chance to present his perspective and peace plan to several influential countries, including some close to Russia.
- Oil has recovered through the summer to around the $85 per barrel mark with Saudi and OPEC+ production cuts, the unwinding of short positions and strong demand from the US, India and elsewhere. Forecasts for the middle of 2024 average just under $90 per barrel and some analysts are expecting a return to $100+. Higher oil prices will strengthen Russia’s finances and help it sustain its war effort.
- Saudi Arabia has recently extended to September its production cuts of 1m barrels per day, which will be the third month of production cuts. Saudi is working together with Russia in OPEC+, which has cut its exports by 300k b/d in September following cuts of 500k in August. However, Russia’s commitment to these cuts is wavering to say the least. Overall, OPEC data shows that Saudi production was down by 860k b/d in July, slightly less than the pledged 1m cut. Saudi’s efforts to push up prices in oil markets are undoubtedly helping Russia to maintain its war in Ukraine. Russia is currently happy to reap the rewards of higher prices and is selling discounted cheap oil to India and possibly China, leaving Saudi and other Gulf countries to bear the burden of cuts.
- Meanwhile, Saudi Arabia was asked by President Zelensky to host a Ukraine peace summit last Sunday, involving 40 countries, including the US, India, the EU and China, but excluding Russia. The discussions were about Zelensky’s proposed 10-point peace plan, although there appears to be disagreement on some of the points, with follow-up talks proposed in six weeks’ time. Zelensky was also invited to Saudi in May for the Arab Summit where he accused leaders of turning a “blind eye” to Russia’s invasion.
- The Saudi decision to host the event is an attempt to leverage its position in the emerging multi-polar world, maintaining ties with all sides. Gulf countries, also including the UAE and Qatar, maintain tight and sensitive relations with both Russia and China, founded on energy policy. Qatar’s prime minister visited Ukraine at the end of July and pledged $100m in aid.
