THE PETROLEUM DUEL

Tensions between Saudi Arabia and the US continue. The kingdom supported the OPEC+ decision proposed by Russia to cut oil production, which has provoked anger in Washington, especially among the ruling Democrats.

The Biden administration said the Saudis had put pressure on other OPEC+ members during the vote. Contrary to claims that officials from both countries are expected to discuss the situation soon, President Biden said he would not meet Saudi Crown Prince Mohammed bin Salman at the upcoming G20 summit in Bali, Indonesia, this November.

The members of the Organisation of Petroleum Exporting Countries (OPEC), including Russia, decided to cut production by 2m bpd starting from November 1.

However, the US, Saudi Arabia's main ally, is against this and has repeatedly urged Riyadh to refrain from such a decision. Washington believes that a reduction in production today can lead to a sharp rise in energy prices on the global market. The Saudi government’s siding with Russia (Moscow is one of the main supporters of the OPEC+ initiative to cut oil production, R+) rather than its traditional ally, the US, at such a difficult time seriously infuriated the US Democrats. Many believe that Riyadh's decision will weaken the Democrats' position ahead of the midterm elections to the US Congress this November. In other words, the Arab countries decided to make this move for the advantage of the Republicans in the elections. Higher fuel prices in the US, especially before the election, can significantly damage the voting pool of the Democrats.

The current US administration led by President Biden has clearly expressed its dissatisfaction with the Saudi leadership. Biden even stated that the OPEC+ decision "will have consequences" for Washington's relations with Riyadh.

Money or politics?

Saudi Arabia claims economic reasons to be the main motivation behind its decision. By relatively reducing the production, Riyadh intends to ensure the stability of high oil prices and increase its revenues. According to Washington officials, behind the plan is the Russian leadership, which amid the fierce battle with the US intends to kick at its enemy on a global level. It is hard not to agree with the Americans. The above OPEC+ decision already pushed the price of a gallon of gasoline in the US by 60 cents (to $4.90). This will undoubtedly affect domestic political processes in the country.

There are three factors behind the Saudi leadership's decision to cut oil production. First and foremost, these include economic reasons. Production cut-off will ensure stability and high fuel prices, hence benefiting the kingdom as one of the world's largest oil producers.

Secondly, Saudi Arabia's decision has openly demonstrated that it is not, as before, a US-dependent country acting at the behest of Washington. On the contrary, it can make decisions contrary to the plans of its allies when necessary. It also shows Riyadh's willingness to cooperate with Moscow.

Finally, the third factor is the upcoming midterm elections for the US House of Representatives. Riyadh believes that economic problems can affect the elections leading to the defeat of the democratic elite in the Congress. This means that Republicans, old friends of the Saudis, can once again win the election.

Tensions between the US and Saudi Arabia over oil production are not new. Even the Republican president and friend of Arab rulers Donald Trump has repeatedly protested against OPEC+ decisions before. However, unlike the Democrats, Trump could establish good relations with the Gulf countries but Qatar, and strengthen their security. During his tenure in the Oval Office, Trump has also increased military aid to these countries by signing major arms deals. Most importantly, he has unequivocally supported the Arabs on sensitive regional issues such as the war in Yemen and their relations with Iran.

Relations between the Democrats and Saudi Arabia have cooled under Biden's predecessor, Barack Obama. In 2016, a US court accused Saudi Arabia of the events of September 11, 2001. And in 2018, Jamal Khashoggi, a Saudi journalist and correspondent for the Democrat-affiliated Washington Post, died under mysterious circumstances in the kingdom's consulate in Istanbul. Both of these events have hurt the Democratic Party's relationship with Riyadh.

In addition, the Democrats took no steps to restore relations with the Saudis either while in power or in opposition. On the contrary, Joe Biden ended his support for the war in Yemen shortly after taking the office. His visit to Saudi Arabia and the region on July 16, 2022 changed nothing.

Incidentally, after the OPEC+ decision journalists asked Biden if he regretted his July visit to Saudi Arabia. He replied negative claiming that the main purpose of his visit was to discuss political issues, including the security of Israel. However, it is no secret that one of the main topics discussed by Biden in Saudi Arabia, according to media reports, was the oil production.

Having charged the Saudi authorities with a number of serious regional political tasks, Biden offered nothing in return. Incidentally, among the tasks that Biden assigned to the Saudis were issues concerning Iraq's energy supply and the reconciliation process with Israel. However, Washington made no serious reciprocal promises either. This was probably the reason why Riyadh decided to go against the Democrats.

Washington's leverage

It sounds strange, but at this stage the Washington administration does not have any serious leverage to punish its overzealous ally. The first thing that the White House decided to do was to reduce military support to the kingdom. Three Democratic congressmen have even drafted a bill to this effect. Thus, the US is supposed to withdraw its armed forces from Saudi Arabia and the UAE, another of its main regional allies, within 90 days of the passage of the bill. More than 5,000 US troops and surface-to-air missile systems Patriot and THAAD are currently stationed in these countries.

The question is to what extent the US withdrawal from the Persian Gulf would be beneficial to Washington. More importantly, will it be an effective pressure on Arab countries, given that the security threat to countries such as Saudi Arabia and the UAE has diminished significantly? In Yemen, for example, there is a fragile truce, while Baghdad has recently finished the fifth round of semi-secret talks with the Arab monarchies' main regional adversary, Iran. Riyadh and Tehran officials are now discussing the restoration of diplomatic relations.

In parallel, the Gulf states are rapidly moving closer to Israel, despite strained relations with the US. Moreover, the UAE and Bahrain have already established diplomatic relations with Tel Aviv. In other words, they have a new ally in the form of the Jewish state, a powerful regional state, although not as powerful as the US, but capable of influencing Washington when necessary.

Incidentally, Turkey has reacted harshly to Washington's call to punish Saudi Arabia. Turkish Foreign Minister Mevlut Cavusoglu said Washington's threats against Riyadh were unacceptable. This shows that Saudi Arabia has managed to put its regional relations in order and in this case serious regional isolation of the country or threats against it are unacceptable.

At the same time, Saudi Arabia and the US continue to maintain economic ties, and the kingdom remains the largest customer of the US military. The loss of such a partner could be detrimental to Washington itself, not to mention the other economic consequences of this affair with pressure on Riyadh to withdraw funds held in the US.

Five factors

First, Saudi Arabia is the largest oil exporter on the planet (18% of the world's oil reserves). And feuding with a country capable of influencing the global oil market is unprofitable.

Secondly, the kingdom is also the third country with the largest military budget in the world, much of which is spent on buying weapons from abroad, mainly from the US.

Thirdly, Saudi Arabia is one of the main centres of the Muslim world and spends a lot of money on security and combating radical Islamist groups.

Fourthly, the kingdom is a regional ally and works closely with the US, especially during a period of strained relations with Iran. Some time ago, Riyadh was part of the coalition against Iraq, supported Washington in the fight against al-Qaeda and ISIS, and helped the Syrian opposition.

Finally, Saudi Arabia remains one of Washington's main trading partners, with investments creating hundreds of thousands of jobs in the US.

Summary

Riyadh’s independent moves against the policies of the Biden administration are not something new. The largest Arab boycott in history took place in 1973, when the Arab states imposed an oil embargo on Western countries for their support of Israel causing a sudden fourfold increase in the price of oil on the global market.

The current cooling of relations, even if it does not result in another oil embargo, will go down in history as a harsh measure by Arab countries against their American ally. And even if this does not affect the outcome of the US elections, Washington will have no choice but to make certain concessions to find common ground with the Arab monarchies. This, in turn, will increase the political weight of the Gulf countries.

In recent years, Saudi Arabia has been actively establishing closer relations with China, coordinating its oil policy with Russia, normalising relations with Turkey and even negotiating with Iran, while making serious and successful attempts to become a regional leader. Recent events also show that the major powers will still have to negotiate with the Gulf states.