EUROPEAN COUNCIL ON FOREIGN RELATIONS | It cost the global energy market almost two months of spectacularly low oil prices but, with the largest deal to cut production in history, Saudi Arabia has won the oil price war. Riyadh coordinated an agreement between OPEC+ – the Organisation of the Petroleum Exporting Countries, along with non-members such as Russia, Norway, Mexico, Argentina, Colombia, Ecuador, Egypt, Indonesia, Norway, Trinidad and Tobago – and the G20 to achieve two key Saudi objectives. The first was to persuade other producers that they must shoulder some of the burden of cutting production to stabilise the oil market; the second was to reaffirm Riyadh’s leadership of energy geopolitics, a prized asset that lends it significant influence. This was, however, a long and costly journey, beginning in February with the coronavirus-induced fall in Chinese energy demand. And there is a high risk that the deal is too little, too late: with no sign that oil prices will rise sustainably, Riyadh may have unleashed something it is unable to control.
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