Russia’s Opec bearhug is something to worry about

As if the prospect of a global recession isn’t enough, consider the latest threat to world economic stability: an alliance between Russia and Opec, the oil-producing cartel dominated by Saudi Arabia.

That’s a scary possibility, as Russia supplies one third of Europe’s energy needs, while Opec accounts for nearly 40 per cent of global oil production. Together they produce half the world’s oil, so any pact that paves the way for Russia to become a full member of the cartel would present a threat to countries such as Britain, which is becoming increasingly dependent on foreign imports as supplies of North Sea oil dry up.

But is such a merger really on the cards? The Russians would clearly like one: last week, it sent its energy minister Igor Sechin to attend Opec’s meeting in Vienna and proposed ‘extensive co-operation’ with the cartel. A memorandum of understanding is being prepared for signature in the coming months.

An alliance would be a boon for the Kremlin, which has already demonstrated in Ukraine and elsewhere that it is prepared to use oil as a political weapon in order to re-establish its influence over the former Soviet empire.

Oil is Russia’s biggest bargaining chip, as the soaraway price has done more than anything else to give it the confidence and clout to re-assert itself on the world stage. A pact with Opec would strengthen Moscow at a time when it has lost friends in the West following its invasion of Georgia and its harassment of foreign companies, such as BP, which have business interests in Russia.

Guardian