OPEC heavyweights Saudi Arabia, the UAE and Iran were invited Aug. 24 to join the so-called BRICS developing nations in a move that could see the group already including Russia flex more influence over global oil markets.
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Register NowOfficials from the UAE and Iran have confirmed they intend to join the group, while officials in Riyadh have given the offer a more cautious response to the invite, which would come into effect on Jan. 1, 2024.
The three OPEC producers would add a further 20% of global oil production to BRICS' existing 21% share based on IEA output estimates.
Saudi Arabia's Foreign Minister Prince Faisal bin Farhan said the country was considering the proposal. Anwar Gargash, an advisor to the ruler of the UAE, said his country's accession would reflect the "strength of our economy, the effectiveness of our diplomacy."
A new BRICS grouping would potentially bring major consumers of medium sour and light crude grades China and India closer to their key Gulf producers. Saudi Arabia, Iran and the UAE already work closely with Russia through the OPEC+ crude production agreement, monitoring market conditions and setting production quotas through a deal agreed in 2016. The agreement has withstood major market events, including the pandemic and Russia's invasion of Ukraine, which led Western countries to limit Russia's involvement in the world economy.
Interest in alternatives to Western groups such as the G7 is on the rise. Countries including sanctioned Russia and Iran are looking to increase cooperation amid major restrictions on their access to the global economy. Russia's involvement in the G8 was suspended in 2014 following its annexation of Crimea.
Gulf policy
Saudi Arabia and the UAE are joining BRICS as they pivot away from the US to focus on growing economies in Asia, where demand for their crude, gas and petrochemicals continues to grow.
Beijing has begun playing a significant role in Middle East diplomacy, recently helping broker a detente between traditional rivals Saudi Arabia and Iran.
Iranian officials said that the country brings energy resources and a strategic location to BRICS.
"Permanent membership in the global group of emerging economic powers is historic progress and a strategic success for the Islamic Republic's foreign policy," Mohammad Jamshidi, the deputy presidential chief of staff for political affairs, said on the social media platform X, formerly known as Twitter.
BRICS member states called for great energy cooperation within the group in the declaration.
It said that it recognizes the role of fossil fuels in supporting energy security and energy transition and sees incentivizing energy investment as a way to address energy security challenges.
It is also working toward developing alternative financial mechanisms.
BRICS established the New Development Bank in 2015, aimed at directing resources for infrastructure and sustainable development projects in emerging markets and developing countries.
Other areas of economic cooperation include increasing the use of alternative currencies to the dollar in international trade. Sanctions against Russia that included freezing some foreign reserves led to increased interest in non-dollar trade among non-sanctioning countries.