Sucker Punch! Russia Could Join OPEC

Sean Brodrick By Sean Brodrick,

Oil & Gas

We’ve seen Russia do a hostile takeover of Crimea and seize parts of eastern Ukraine. Now, the Russians are elbowing their way into the conflict in Syria, propping up that country’s dictator, Bashar al-Assad.

But Russia’s biggest takeover might be ahead… and it could rock the world.

Russia’s new mission? To seize control of the Organization of the Petroleum Exporting Countries (OPEC).

“But wait,” you might say, “Russia isn’t a member of OPEC.”

Not yet.

But weird stuff is happening overseas. These developments could reshape OPEC, expand Russia’s empire of oil and relegate Saudi Arabia to the backseat as Putin drives for power.

Let me give you a little background. See, when oil prices started to slide big-time last year, OPEC invited Russia to a meeting about stabilizing oil prices. Why? Russia was constantly vying with Saudi Arabia to be the No. 1 producer of oil.

But Russia turned down the meeting. And oil prices fell off a cliff.

Finally, in May, Russia met with OPEC. But the country refused to cut its production. Talks went nowhere. Oil prices slid further.

Fast-forward to today. Russia recently announced that its September oil production soared to levels not seen since the fall of the Soviet Union. Russia pumped an average of 10.74 million barrels a day.

Shortly afterward, Russia announced that it was ready to meet with members of OPEC to discuss the situation facing global oil markets.

So why are the Russians suddenly ready to cooperate?

Simple: It’s a power play.

The “Central Bank of Oil” has been in a production war with not only U.S. shale producers, but also other OPEC member states. The Saudis recently slashed oil prices when selling to Asia. This move counters similar moves made by Iran and Iraq.

Now, Russia is aligned with not just Assad, but also Iran. Indeed, Iran and Saudi Arabia are in a deadlock that is splitting the Arab world… and could rip OPEC apart.

But here comes “peacemaker” Russia. Do you see where this is going? Russia is now willing to work with OPEC to shore up oil prices. And Russia and OPEC together control more than half the world’s oil production…

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Now, do I think Russia cares one whit who wins in the struggle between Saudi Arabia and Iran? Ha! What Russia sees is an opportunity.

Oil and natural gas are the foundation of Russia’s new emerging empire. And that empire is being built in the shadow of the shattered Soviet Union. Putin has made it clear on many occasions that Russia’s vast mineral wealth is key to the country’s economic development and military might.

Just look at how much of a cash cow energy is for Russia…

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Russia has suffered along with other OPEC members as Saudi Arabia has pursued its high-production policy to undercut U.S. shale producers. It’s pretty obvious Russia would like that to change.

What Comes Next

I think Russia is ready to make a deal with OPEC. Maybe Russia will join OPEC outright. Maybe it will create a closer alliance.

How could this scenario play out?

Suddenly, OPEC members that have been grumbling in Saudi Arabia’s shadow for so long will have a real ally. Saudi Arabia knows that as OPEC goes, so goes its own fortune. It will have to agree to whatever deal Putin puts forward.

And with the power of OPEC behind him, Putin can not only lower global oil production and raise prices… He can finally face the United States on an equal footing.

We think the world will always go on the way it always has. But sometimes change is slow, and sometimes it is abrupt. And what comes next could knock Uncle Sam right on his keister. What a sucker punch that would be.

What You Can Do

There are energy stocks in the bargain bin right now. Not all of them are worth buying. But some are. Start making your shopping list. Buy the big dips. Because a big rally is coming. And maybe this time, it will be led by a Russian bear.

All the best,

Sean

  • M. K. Theodoratus

    Shouldn’t your graft include the USA now days?

  • Sean Brodrick

    We are included in the rest of the world.

  • Malcolm

    Please do not make false allegations in your articles . Whether you like Russia or not there was no hostile takeover of Crimea . Crimea ceded from the Ukraine after a democratic vote by over 90% . Historically it had always been part of Russia until forced to join Ukraine by the USSR

  • Victoria Bessinger

    The best way to neutralise this power situation is to stop being dependent on oil (imported or domestic).

  • Sean Brodrick

    Stop the Presses! Saudi Arabia targets Russia in the two countrys’ new battle for oil supremacy! http://www.reuters.com/article/2015/10/15/uk-russia-saudi-oil-idUKKCN0S90DF20151015

  • Badr Mike

    This scenario could be avoided easily by correcting Obama POLICY that allowed Russian and Iran and Brotherhood spread chaos in Mideast

  • Badr Mike

    The Obama policy pushed G.C.C,Jordan and Egypt to ally not only with Russia but also with French, America should CORRECT its policy before it loses allies in favor Russia

  • Norm

    Syria president is not a dictator, he is protecting his nation from the Islamic terrorists, please be fair. and respect he people of Syria that are dying everyday because of US Allies supporting those terrorists (Saudi, Turkey and Jordan). Thanks