Saudi Arabia and Russia are working on a long-term deal to extend their alliance on oil curbs that began in January, 2017, after a crash in crude prices.
“We are working to shift from a year-to-year agreement to a 10-20 year agreement,” Saudi Crown Prince Mohammed bin Salman told Reuters news agency. “We have an agreement on the big picture but not yet on the details.”
Saudi Arabia has led the Organisation of the Petroleum Exporting Countries (OPEC) and allies outside of the cartel to join forces to stabilise oil prices.
In 2014 the prices plunged from more than $100 a barrel to below $30 a barrel, which shook the economies of producer nations.
Crude prices have since recovered to $70 a barrel but fast-rising output from US shale producers has capped prices.
Russia is not a member of OPEC but has worked alongside the 14-member group during previous oil surpluses. Moscow’s involvement until now has been considered unique, but a 10 to 20 year deal between the two would be unprecedented.
News of the potential oil alliance came at a time when the two countries have been working to cement an economic relationship, despite their differences over the conflict in Syria, where they back opposing sides.
Saudi Arabia has long sought to raise prices to fund economic and social reforms at home and their main goal is to eventually reduce the kingdom’sreliance on oil-related incomes.
It also needs higher prices for its state energy giant Aramco to get a stock market listing. Time is running out for an initial public offering this year, but the crown prince said it could still take place at the end of 2018 or in early 2019.
Oil price stability as part of the project would allow greater investment into oil and gas to meet future demand, according to Saudi Arabia.
Last October, Saudi King Salman became the first Saudi monarch to visit Russia, providing investment and political support for Russian economy battered by Western sanctions.
A meeting between the Saudi crown prince and Russian President Vladimir Putin on the sidelines of a G20 meeting in China in 2016 was instrumental in bringing Russia on board to support OPEC and non-OPEC oil curbs.