The Saudis floated the idea of higher oil prices to get Russia to stop supporting Assad in Syria

Putin saudisRob Griffith/ReutersPresident of Russia Vladimir Putin (L) and Crown Prince Salman bin Abdulaziz Al Saud (R) of Saudi Arabia talk through their interpreters during a plenary session at the G20 leaders summit in Brisbane November 15, 2014.

It looks like Saudi Arabia might be using oil policy to pressure Russia into backing away from its support for the Syrian regime of Bashar al-Assad.

The New York Times reports (emphasis ours)

Saudi Arabia and Russia have had numerous discussions over the past several months that have yet to produce a significant breakthrough, according to American and Saudi officials. It is unclear how explicitly Saudi officials have linked oil to the issue of Syria during the talks, but Saudi officials say — and they have told the United States — that they think they have some leverage over Mr. Putin because of their ability to reduce the supply of oil and possibly drive up prices.

The idea here, it seems, is that the Saudis are offering to reduce oil production, which would drive up prices and therefore alleviate some of Russia’s current economic problems, if Russian President Vladimir Putin agrees to withdraw support for Bashar al-Assad in Syria.

“If oil can serve to bring peace in Syria, I don’t see how Saudi Arabia would back away from trying to reach a deal,” a Saudi diplomat told the Times.

That the idea might be on the table is fascinating, if highly unlikely.

For one thing, the Saudis don’t seem to be close to movement on the oil production front. Its representatives have continually stated that they aren’t willing to cut production, even as the price of crude plummets.

Also, the two countries are on polar opposite sides of the conflict.

Sunni Saudi Arabia has called for Assad’s ouster from the beginning, and has funded opposition groups to facilitate the Sunni-dominated revolution. Putin has been a staunch backer of Assad, whom Putin sees as a bulwark against Western meddling in the Middle East.

Over the course of the four-year Syrian conflict, Russia has provided the embattled Syrian regime with supplies including guns, grenades, tank parts, fighter jets, advanced anti-ship cruise missiles, long-range air defence missiles, military officers as advisers, diplomatic cover, and lots of cash.

And then there’s the question of what Saudi production’s role in setting prices is right now. The idea is that they are keeping prices low in order to starve other producers so they can regain some market share.

Cutting production is a gamble for them. It will probably push the price of crude higher, but what if the price doesn’t go as high as the Saudis need it to?

The answer: They lose some credibility as a market player, and possibly don’t get what they want out of the Russians.

In any case, the tactic would embolden Saudi Arabia’s biggest rival and primary Assad backer: Shia Iran.

“You are going to strengthen your enemy whether you like it or not, and the Iranians are not showing any flexibility here,” Mustafa Alani, an analyst at the Gulf Research Center who is close to the Saudi royal family, told the Times.

All that said, it’s an interesting negotiating tactic — even if just floated — and definitely something to keep an eye on.

NOW WATCH: Money & Markets videos

Want to read a more in-depth view on the trends influencing Australian business and the global economy? BI / Research is designed to help executives and industry leaders understand the major challenges and opportunities for industry, technology, strategy and the economy in the future. Sign up for free at research.businessinsider.com.au.