The OPEC oil cartel cannot withstand the pain of low crude prices indefinitely and may be forced to abandon its pugnacious bid for market share within months, Russia's chief energy official has predicted.

Arkady Dvorkovich, the deputy prime minister, said OPEC producers are suffering the ricochet effects of their attempt to flush out rivals by flooding the world with excess output.

Saudi Arabia took a fateful decision last Novemberto crank up production to record levels despite a glut of 1-2m barrels a day (b\d) accumulating in global markets

Riyadh has made it clear that it will not cut output to shore up prices unless non-OPEC producers share of the burden. This essentially means Russia, the world's biggest producer.

Russia insists that it cannot switch off output as easily as the Saudis, given the harsh weather in the Siberian fields, a claim dismissed by OPEC as a negotiating ploy.

The Russians and the Saudis have powerful reasons to co-operate on energy policies. The contours of a realpolitik entente between Saudi Arabia and Russia are emerging, with major implications for the global oil markets and the world economy.

bbabo.Net