Russian President Vladimir Putin shakes hands with Saudi Arabia’s Deputy Crown Prince and Defence Minister, Mohammad Bin Salman during a meeting at the Kremlin in Moscow, Russia. Image Credit: Reuters

For the oil market, it looks like the real Opec meeting will come a week ahead of schedule.

The group is set to meet on December 6 in Vienna, but days earlier, the key decision makers will meet on the sidelines of the G20 summit in Buenos Aires, and they may well decide the direction of 2019’s oil prices.

Saudi Arabia’s Crown Prince Mohammad Bin Salman (MBS) and Russian President Vladimir Putin — leading the world’s two largest oil exporters and working together to manage the oil market for the past two years — both plan to be in the Argentinian capital at the end of next week. Just as important will be US President Donald Trump, who’s made his opposition to Opec a regular theme in his Twitter diplomacy.

“I expect President Trump will be discussing the optimal price range with Crown Prince Mohammad Bin Salman and President Putin at the G20,” said Bob McNally, president of Washington consultant Rapidan Energy Advisors LLC and a former White House energy official.

The oil market is abuzz with talk that Saudi Arabia may not be in a political position to cut production. “The market is assuming the Saudis won’t be able to cut,” said Amrita Sen, chief oil analyst at Energy Aspects Ltd in London.

Khalid Al Falih and Alexander Novak, the Saudi and Russian energy ministers, are also scheduled to travel to Buenos Aires together with their principals, according to anonymous sources. Their presence reinforces the impression that Saudi Arabia and Russia will try to reach a deal ahead of the Opec meeting a few days later.

Energy policy

It wouldn’t the first time the two energy superpowers used a G20 summit to decide on oil policy.

At the early September 2016 summit in Hangzhou, China, Putin sat down with MBS to discuss how to revive oil prices. Hours after their private meeting, the Saudi and Russian oil ministers appeared in a joint press conference. The message was clear: Riyadh and Moscow were working together and a few days later, they announced that Opec and a number of non-Opec nations would cut production.

The gathering in Buenos Aires comes after a week of near-panic in the oil market. Brent crude, the global benchmark, plunged 6.1 per cent to a one-year low of $58.80 (Dh216) a barrel on Friday, down 22 per cent this month on growing concerns the world is oversupplied. West Texas Intermediate, the US benchmark, fell close to $50 a barrel.

Trump had already celebrated the plunge on Wednesday, tweeting: “Oil prices getting lower. Great!” Yet, he wants more: “Thank you to Saudi Arabia, but let’s go lower!”

So far, the 33-year-old Saudi Crown Prince appears to be doing his best to keep oil prices low. Their crude production reached an all-time high in November, surging to 10.8 million barrels to 10.9 million barrels per day, up from 10.65 million in October, according to industry executives who track Saudi output.

Yet, not everyone in the oil market is convinced that MBS will keep the taps open to please Trump. As much as the US president wants low oil prices, the Saudi prince needs higher oil prices to to finance social and military spending.

“It remains our view that the Kingdom will adopt a ‘Saudi First’ policy and prioritise its own economic and social welfare above pleasing the American president,” said Helima Croft, chief commodities strategist at RBC Capital Markets LLC and a former CIA analyst.