Saudi Arabia agrees to buy Russian S-400 air defense system

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Furthermore, according to the signed document the two parties could collaborate on the production of equipment for oil and gas field development, by localising production either in Russian Federation or Saudi Arabia.

The two countries plan to cooperate on energy, economic development and regional security and have already signed a $1 billion energy investment deal.

Russian President Vladimir Putin hosted Saudi Arabia's King Salman for talks at the Kremlin on Thursday, cementing a relationship that is crucial for determining world oil prices and could be pivotal for resolving conflicts in the Middle East. Mr Putin expressed hope that it would boost ties between the two countries.

The Saudi King's trip to Moscow is nothing short of a historic event, given the fact that it is the first time a Saudi monarch has visited Russian Federation in the history of bilateral ties.

Reports say the deals range from an arms deal worth $3bn (£2.3bn) to a $1bn energy investment fund.

"We are working on a number of agreements and we will announce them during the visit", Novak said regarding the efforts to expand Saudi-Russian cooperation within the energy industry.

Now, $1bn (energy deal) is like a drop in water for a country having over $50bn in budget deficit and borrowing billions more, locally and internationally.

Salman arrived in Moscow along with Energy Minister Khalid al-Falih, Foreign Minister Adel al-Jubeir and Minister of State Musaed al-Aiban.

Saudi Arabia's King Salman arrives in Russian Federation.

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For Russia, "price gains are more valuable than volume gains - how much can you really pump more from last year's peak production level?" he said.

The increase followed a widening of the discount for US crude against Brent, making USA oil attractive on world markets.

Saudi Arabia and Russian Federation have helped secure a deal between OPEC and 10 suppliers to cut output until the end of March 2018 in an effort to reduce a price-sapping glut.

Global crude oil inventories are moving closer to balance and Falih said that, by the fourth quarter, supply will be less than demand.

Saudi Arabia's turn to Russian Federation comes after Turkey, a longtime backer of Syrian rebels, changed course and pooled efforts with Russian Federation and Iran to help broker de-escalation zones in Syria that helped reduce violence.

The rebalancing of oil inventories is well under way, he said.

In addition, Saudi Arabia is trying to build a closer relationship with President Trump and his administration, while the USA has sanctioned Russian Federation over its involvement in the Ukraine crisis.

He said the territorial integrity of Iraq must be preserved.