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How Putin, Khamenei, Saudi prince got OPEC deal done

Russian President Vladimir Putin delivers a speech during his annual state of the nation address at the Kremlin in Moscow, Russia. PHOTO: REUTERS

RUSSIAN President Vladimir Putin played a crucial role in helping OPEC rivals Iran and Saudi Arabia set aside differences to forge the cartel’s first deal with non-OPEC Russia in 15 years.
Interventions ahead of Wednesday’s OPEC meeting came at key moments from Putin, Saudi Deputy Crown Prince Mohammed bin Salman and Iran’s Supreme Leader Ayatollah Ali Khamenei and President Hassan Rouhani, OPEC and non-OPEC sources said.
Reuters reported that Putin’s role as intermediary between Riyadh and Tehran was pivotal, testament to the rising influence of Russia in the Middle East since its military intervention in the Syrian civil war just over a year ago.
It started when Putin met Saudi Prince Mohammed in September on the sidelines of a G20 gathering in China.
The two agreed to cooperate to help world oil markets clear a glut that had more than halved oil prices since 2014, pummeling Russian and Saudi government revenues. Oil prices are up 10 pct this week topping $53 a barrel.
The financial pain made a deal possible despite the huge political differences between Russia and Saudi over the civil war in Syria.
“Putin wants the deal. Full stop. Russian companies will have to cut production,” said a Russian energy source briefed on the discussions.
In September, OPEC agreed in principle at a meeting in Algiers to reduce output for the first time since the 2008 financial crisis.
But the individual country commitments required to finalise a deal at Wednesday’s Vienna meeting still required much diplomacy.
Recent OPEC meetings have failed because of arguments between de facto leader Saudi Arabia and third-largest producer Iran. Tehran has long argued OPEC should not prevent it restoring output lost during years of Western sanctions.
Proxy wars in Syria and Yemen have exacerbated decades of tensions between the Saudi Sunni kingdom and the Iranian Shi’ite Islamic republic.
Heading into the meeting, the signs were not good. Oil markets went into reverse. Saudi Prince Mohammed had repeatedly demanded Iran participate in supply cuts. Saudi and Iranian OPEC negotiators had argued in circles in the run-up to the meeting.
And, then, just a few days beforehand, Riyadh appeared back away from a deal, threatening to boost production if Iran failed to contribute cuts.
But Putin established that the Saudis would shoulder the lion’s share of cuts, as long as Riyadh wasn’t seen to be making too large a concession to Iran. A deal was possible if Iran didn’t celebrate victory over the Saudis.
A phone call between Putin and Iranian President Rouhani smoothed the way. After the call, Rouhani and oil minister Bijan Zanganeh went to their supreme leader for approval, a source close to the Ayatollah said.
“During the meeting, the leader Khamenei underlined the importance of sticking to Iran’s red line, which was not yielding to political pressures and not to accept any cut in Vienna,” the source said.