In the areas of fuel and energy, Saudi Arabia follows a path independent from the United States.
Recent anti-Russian sanctions and their secondary and tertiary consequences on the “daredevils” who continue to trade with Russia have caused the world economy to experience extreme instability. In the current environment, few players have been able to adapt to the dramatically changing new reality, but some can definitely be taken as an example. We are talking about the Kingdom of Saudi Arabia, which has shown itself to be unusually agile and flexible on the international stage.
At the June 2023 OPEC+ meeting, Riyadh announced a production cut of 1 million barrels a day for a month, with the possibility of an extension, according to the official press release. The rest of the cartel participants decided to prolong the previous restrictions until the end of next year, and Russia extended the voluntary reduction by 500 thousand barrels a day. Of course, at first glance, it seems like a typical OPEC+ statement, but the devil is, as ever, in the details.
According to statements of Abdulaziz bin Salman Al Saud, Minister of Energy for the Kingdom of Saudi Arabia, the formal reason for such a decision by Saudi Arabia is the desire of the KSA to free up financial resources for megaprojects, including the prospective smart city of Neom worth about 1 trillion dollars, as well as the return of stability in the oil market. But is it really so?
It is no secret that oil production in the Gulf countries is focused primarily on the the Asian market, which the Arabs are bound with by obligations under long-term contracts. Reports from financial observers have raised concerns that Asia’s leading economy, China, has been weakening slowly since the covid restrictions were put in place. The decline in China’s manufacturing activity inevitably leads to a drop in demand for petroleum products. For this reason, traders took the news of the “unprecedented decline” in oil production rather calmly. In the event of a shortage of raw materials, the Saudi share will be replaced by the Russian share or purchased on the spot markets. In addition, the Arabs promised the Asians to fulfill all contractual obligations and deliver oil in the appropriate amount.
At the same time, despite the spasmodic character of hydrocarbon prices, for some economies of the world, primarily the US, such dynamics have negative consequences. For example, the Biden administration, amid obvious failures in domestic policy, will have to again justify itself to Congress and the people of the United States for another increase in fuel prices. The situation of Americans is also aggravated by the recently passed, albeit with great effort, amendments to the debt ceiling, which kept the US economy from implosion for a while.
Previously, Saudi Arabia has not shown such autonomy and has acted with an eye on Washington, especially on issues related to the regulation of hydrocarbon prices. However, in recent years, Saudi Crown Prince Mohammed bin Salman has been determined and resilient in building relations with the United States. Last July, for example, Biden’s attempt to convince Bin Salman of the need to increase oil production amid anti-Russian sanctions failed. This event was followed by the KSA’s reconciliation with Iran in March 2023 and, in May, at the instigation of the Saudis, the return of Syria to the League of Arab States.
This time, ahead of the presidential election, the Democrats are also trying to put pressure on the Saudi Crown Prince by sending high-ranking US officials to him one by one. Among them were Jake Sullivan, US national security advisor to President Joe Biden, William Burns, Director of the Central Intelligence Agency, Brett McGurk, White House Coordinator for the Middle East and North Africa, and Amos Hochstein, Special Presidential Coordinator for Global Infrastructure and Energy Security. The last to visit was by the US Secretary of State Antony Blinken. Bin Salman, however, was reluctant, and ordered that the KSA’s oil production be lowered to a historic low.
The fact is that Saudi Arabia, the Middle Eastern oil giant, which has long depended on the United States, has started pursuing its own independent policy, which brings to the forefront the national interests of the kingdom and thus has a great impact on the regional situation and the global economy. Here the Saudis emphasize multi-vector diplomacy and a multipolar world, where Riyadh builds relations with all world players, including Washington’s competitors, to its advantage. Players like Iran, Russia, the PRC, and Latin America.
Such actions by the Crown Prince are unlikely to have frightened the current administration, which made an important decision this spring regarding engagement with Saudi Arabia. Leaving aside Biden’s tepid personal relationship with bin Salman, it moved on to a policy of building rapport between the two states by trying to appease the Saudi prince. It is safe to say that if Washington is going to compete with Beijing and Moscow, it cannot afford to exclude from its ranks such a powerful partner as Riyadh.
Madi Khalis Maalouf, a political observer, exclusively for the online magazine “New Eastern Outlook.”