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Thu 7 Jun 2018 03:08 PM

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Why the Saudi-Russia football clash has oil market's attention

Vladimir Putin and Mohammed bin Salman's meeting at World Cup's opening match could reshape the global oil market

Why the Saudi-Russia football clash has oil market's attention

This month’s packed geopolitical calendar has another key date - a meeting between Vladimir Putin, the Russian president, and Mohammed bin Salman, the powerful Saudi crown prince.

The leaders will watch a World Cup soccer match between their nations at the Luzhniki stadium in Moscow on June 14. While their low-ranked teams look unlikely to play a major role in the tournament, the encounter could reshape the global oil market.

The match is happening only eight days before a crucial meeting of the Organisation of Petroleum Exporting Countries in Vienna, providing a last-minute chance for the two leaders to iron out a possible oil-output increase.

With some members of the cartel resisting the Saudi-Russia proposal, the potential for a breakthrough resulting from high-level petro-diplomacy was a hot topic among oil traders this week. Abu Dhabi Crown Prince Mohammed Bin Zayed Al Nayhan’s visit to Jeddah on Wednesday for talks with Prince Mohammed, soon after his own trip to Moscow last week, inflamed the speculation.

The announcement of the exact date of the meeting will come "in time," said Kremlin spokesman Dmitry Peskov. The prince is expected to stay in Moscow just for the day of the match, said people familiar with his itinerary.

The two nations brokered a landmark deal in late 2016 to cut production, assembling a group of 24 nations from OPEC and outside the cartel. Putin has spoken on the phone with the Saudi king or the crown prince in the days before recent OPEC meetings to discuss what the Kremlin has called "fruitful coordination on world hydrocarbon markets."

In the last few weeks, Moscow has given signals that it may be ready to wind down the agreement, advocating for higher oil production and lower prices.

“We’re not interested in an endless rise in the price of energy and oil,” Putin said in late May. Moscow was happy with oil prices of around $60 a barrel, he said, which is below the recent range of $75-$80 a barrel. Putin also made clear his deal with Saudi Arabia and the rest of OPEC wasn’t open ended.

“Our arrangements were never intended to remain in force forever," Putin said.

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