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. Last Updated: 07/27/2016

Saudi Crown Prince Flies In

Underlining Russia's growing importance on the world oil market, the crown prince of Saudi Arabia arrived Monday for a three-day state visit, the first since 1932.

Crown Prince Abdullah Bin Abdul Aziz Al-Saud has come to promote closer cooperation between Saudi Arabia and Russia, the world's No. 1 and No. 2 crude oil exporters, and push Russia to side with OPEC in the struggle with consumer-countries, like the United States, over the price of oil.

The United States has put considerable effort into courting Russia as a potential oil supplier and alternative to Saudi Arabia, as it questions the solidity of its relationship with the Arab kingdom in the aftermath of the Sept. 11 terror attacks.

Saudi Arabia may be looking to Russia for similar reasons, to counterbalance its dependence on the United States.

Prince Abdullah's official meetings with President Vladimir Putin, Prime Minister Mikhail Kasyanov and Foreign Minister Igor Ivanov are to cover a range of issues, including postwar Iraq and the Middle East conflict, a Foreign Ministry press service official said Monday.

The Saudi leader also is expected to try to reassure Russia that his country does not tolerate terrorists or those who support them. Moscow has accused Saudis of providing financial support to Chechen terrorists.

While the Foreign Ministry refused to provide much detail on expected oil-related discussions, the issues are obviously a priority, given that Prince Abdullah arrived accompanied by Saudi Oil Minister Ali al-Naimi and that his delegation was greeted at Vnukovo Airport by Energy Minister Igor Yusufov.

The two ministers managed to get in a quick round of talks almost as soon as the Saudi jet touched down, the Energy Ministry said in a statement released Monday evening.

Secretaries who answered the telephone in various departments of the Saudi Embassy on Monday said no diplomats were available to comment on the visit by the crown prince, who has been the de facto ruler of Saudi Arabia since King Fahd, his older half-brother, suffered a stroke in 1995.

Despite the high level of the visit, analysts said they expect no concrete agreements.

"Russia's leadership is likely to say all the right words" to keep the Saudi delegation happy, but the results of Saudi attempts to bring Russia closer to OPEC's position are likely to be minimal, said Julian Lee, senior energy analyst with London-based Center for Global Energy Studies.

"I don't think the Saudis are looking for a specific commitment in terms of Russia agreeing to maintain a certain export level, or agreeing to cut output," Lee said in a telephone interview Monday.

"I believe they are looking for a much more general agreement in which the Russian government would state that it is interested in stabilizing oil prices at a level adequate for oil producers and not damaging for consumers-countries' economies."

Even if the Russian government wanted to, it would have trouble enforcing a cut in production or exports by the country's largely private oil companies.

As a nonmember of OPEC, Russia has benefited from being free from complying with OPEC quotas designed to prop up world oil prices.

The high oil prices of recent years are largely behind Russia's impressive 5 percent to 7 percent growth in gross domestic product and the record swelling of Central Bank reserves, which currently stand at $63 billion.

Apart from defending the interests of the Organization of Petroleum Exporting Countries, Saudi Arabia is dependent on high oil prices itself. The windfall oil revenues of the past few decades that allowed the kingdom to provide lavish living conditions for its subjects are slowly drying up.

OPEC maintains that the price range that would satisfy the cartel, which controls about a third of oil supplied to the world market, should be locked in from $22 to $28 per barrel.

Even though the price of oil has balanced close to $30 per barrel in recent months, OPEC has issued a number of warnings predicting that the price is about to fall due, due to the arrival on the market of Iraqi oil, among other reasons.

Russia's oil companies have said that a price range of $16 to $22 would be enough to maintain a profit.

But a decision on Russia's dilemma -- whether to side with producers or consumers -- has been put off by the limited export capacity of the national pipeline monopoly, Transneft.

Remarkably, according to Lee, the true push for a decision is likely to arrive from within Russia -- from domestic producers, who already are beginning to face the problem of finding markets for ever-growing oil output.

Russia produces some 8.4 million barrels of crude oil a day, of which about 36 percent, or just over 3 million barrels, is exported. Oil output has been growing by about 10 percent a year over the past few years.

Valery Nesterov, oil and gas analyst with Troika Dialog investment bank, said Russia has three to five years to make a choice. "So no concrete agreements are to be expected [from the Saudi visit]" he said. "But it is time to start some kind of better relations that in the past have not been terribly close."