The Kremlin said ahead of the visit that Salman and Putin would also discuss "the situation in the Middle East and North Africa, especially focusing on conflict situations in the region".
Photos show Putin personally pour a cup of tea for his royal guest at the Kremlin Palace.
It's the first time the Saudi monarch had paid visit to Russian Federation for official business.
In the framework of boosting the Saudi military capabilities and rehabilitating them with the strongest and latest weapons produced by the world's major countries, military agreements were signed between Saudi Arabia and Russian Federation during King Salman bin Abdulaziz Al Saud's visit to Moscow.
Oil prices steadied on Thursday on expectations that Saudi Arabia and Russian Federation would extend production cuts, although record US exports and the return of supply from a Libyan oilfield dragged on the market.
While Saudi and Russian Federation helped secure a deal between OPEC and other producers to cut output until the end of March 2018, they support competing sides in Syria's civil war.
Thousands attend funeral of slain militant Qayoom Najar in Sopore
Meanwhile, the police and Army launched massive searches for Najar after the civilian killings and attack on mobile towers. Najar, a resident of Sopore township, was "one of the most dreaded terrorists" in Kashmir in the recent times, he said.
Before the visit, Russian Foreign Minister Sergei Lavrov described the event as "an historical moment". Our relations have an extremely large history, "he said".
The Saudi government booked two entire luxury hotels for the visit: the Ritz Carlton and the Four Seasons.
Additionally, Russia's state atomic corporation Rosatom and the Saudi Energy Ministry signed a nuclear energy cooperation accord.
The source estimated that size of the Saudi delegation to Russian Federation to be more than 100 people, adding that the visit will last four days.
Putin and King Selman are also expected to establish an investment fund of about $1 billion to support energy projects.
Commenting on a possible United States reaction to a potential Saudi-Russia military deal, Nafaa said that the agreement is unlikely to lead to a significant deterioration in Washington-Riyadh ties. US light crude was up 10 cents at $50.08. "The political will of Moscow and Riyadh for deeper cooperation on the widest range of issues is clear".
"As satisfied as we are with the progress made, I think you agree that our job is not done and there are still uncertainties and headwinds on global oil markets", he said.