The Role of Putin, Khamenei, and Saudi Arabia's Crown Prince in the OPEC Agreement

Reuters reports that Vladimir Putin, the President of Russia, played a decisive role in resolving the disputes between Iran and Saudi Arabia to reach the first OPEC agreement with Russia in fifteen years. Informed sources within and outside OPEC say that the intervention of Vladimir Putin, Mohammed bin Salman, the Crown Prince of Saudi Arabia, Ayatollah Khamenei, the Supreme Leader, and Hassan Rouhani, the President of Iran, helped facilitate the recent agreement among oil-exporting countries in the critical moments before the OPEC meeting on Wednesday. Putin's role as a mediator between Iran and Saudi Arabia was vital and underscores Russia's expanding influence in the Middle East following its military intervention in the Syrian civil war, which began in September 2015. Putin's mediation began after his meeting with the Saudi prince on the sidelines of the G20 summit in September this year. The two sides agreed on ways to prevent the continued decline in oil prices that began in 2014 and severely reduced the foreign revenues of both countries. Oil prices rose about 10% this week, reaching $53. Despite the differences between the two countries regarding the Syrian civil war, the financial pressure from falling oil prices created the conditions for an agreement between Russia and Saudi Arabia. OPEC agreed to cut production for the first time since the global economic crisis of 2008 during its meeting in September. However, finalizing the terms and commitments of each member country required extensive diplomatic efforts. In previous months' meetings, no agreement was reached due to the disagreement between Saudi Arabia and Iran over each country's production levels. Saudi Arabia wanted Iran to maintain its production ceiling according to the proposed quotas in exchange for its production cut. However, Iran insisted on increasing its production to levels prior to international sanctions and previous OPEC quotas. In recent years, in addition to crisis hotspots in the Middle East, the proxy war between Saudi Arabia and Iran in Yemen has also severely strained relations between the two countries. Reuters adds that all signs were negative on the eve of the recent OPEC meeting in Vienna. Oil prices were declining, and the disagreements between the Iranian and Saudi delegations in OPEC were intensifying. Even a few days before the meeting, Saudi Arabia threatened that if Iran did not reduce its production, Riyadh would also increase its output. In such circumstances, Vladimir Putin was able to convince Saudi Arabia to accept a significant portion of the production cut on the condition that Iran would not celebrate its victory over Saudi policy in OPEC. A phone call between Vladimir Putin and Hassan Rouhani calmed the situation. A source close to the Iranian leader's office said that after this call, Hassan Rouhani and Bijan Zanganeh, Iran's Minister of Oil, met with Ayatollah Khamenei. This source in Vienna told Reuters that 'Ayatollah Khamenei emphasized Iran's red line in this meeting, which was not succumbing to political pressures and not accepting a production cut at the Vienna meeting. Mr. Zanganeh explained his strategy, and Ayatollah Khamenei approved it. At the same time, it was agreed that political lobbying, especially with Vladimir Putin, was very important, and the Iranian leader confirmed this point.' On Wednesday, Saudi Arabia agreed to a significant production cut while Iran was allowed to slightly increase its output. According to OPEC officials, Bijan Zanganeh did not promote this matter on the sidelines of the meeting. The agreement was reached the night before the meeting with the help and mediation of Algeria. Contrary to usual practice, the Iranian oil minister refrained from any comments that might portray Iran's victory over Saudi Arabia. After the Wednesday meeting, Mr. Zanganeh said in an interview with Iranian state television: 'Our position was firm. The phone call between Mr. Rouhani and Mr. Putin played an important role, and after that, Russia supported the production cut plan.' However, at the last moment, the position of the Iraqi government became the main issue of this meeting. Iraqi officials stated that given the heavy costs of the war against terrorism, the country could not reduce its production. According to an OPEC source, the Iraqi oil minister, who was under intense pressure from his peers at the Vienna meeting, consulted with the Iraqi Prime Minister in the middle of the session and in the presence of other representatives. Haider al-Abadi told the Iraqi representative, 'Accept the agreement!' and thus the OPEC meeting was able to approve this agreement.