FT: Russia dug in for a long battle in the oil price war

FT: Россия окопалась для долгой битвы в нефтяной войне цен

The decision of Saudi Arabia and Russia to start a war over oil prices promise both parties a lot of pain, tremendous collateral damage and no guarantee that this war will be a clear winner.

“The likelihood that an aggressive first volley of Saudi Arabia offer buyers huge discounts and the opening of the valves will push Russia back to the negotiating table at that time, as falling oil prices, is small. Perhaps the decline in production, in the end, more profitable?” – think Obozrevatel Financial Times David Sheppard.

“But if indeed such is the strategy of Mohammed bin Salman, the crown Prince of the Kingdom and de facto ruler, and his half-brother, energy Minister Prince Abdulaziz bin Salman, the two might want to think again. Against the two princes are the most influential figures in the Russian energy sector. Vladimir Putin, the President, is familiar to most people. The other person – his longtime ally and the head of Rosneft, the leading oil company in the country Igor Sechin, who was once called the Darth Vader of the Russian oil industry: the influential “second room” with a reputation for ruthlessness. The head of “Rosneft”, like Putin, was forged in the dark days of the cold war. As the man whom he followed to Moscow from St. Petersburg city hall, Sechin said the collapse of the Soviet Union a disaster, which has become a possibility,” the article says.

“Once on top of the largest oil companies of Russia in 2012, Sechin has always opposed cooperation with OPEC or the strategy of reducing production. He believed that it supports a high enough prices to allow competitors of the shale sector in the US continue to expand. After Washington imposed sanctions on Russia, Sechin may have noticed that wall street is finally beginning to get tired of support is almost non-profit expansion of the oil shale industry. Old soldier of the cold war saw an opportunity to strike back,” writes Sheppard.

“And the initial results are, in fact, can be enjoyable for Sechin. Shares in some of the shale companies in the U.S. fell by more than a third on Monday. It is possible that the price war will soon be over. But don’t count on it. One gets the impression that Russia is more entrenched for a long battle,” concludes the author.