The October 5 decision by OPEC’s thirteen members and the ten non-member major oil producers—collectively known as OPEC Plus—to cut oil production by 2 million barrels a day apparently came as a surprise to Washington. That decision, much to the Biden Administration’s chagrin, would not have been possible if Saudi Arabia had objected to it.
Last July, U.S. President Joe Biden swallowed his pride and visited Saudi Arabia, a country he had previously labeled a “pariah”, and met not only with King Salman, but also Crown Prince Mohamed Bin Salman whom he had vowed just a month earlier not to meet. As bitter as the pill may have been, there were enough reasons to justify the visit, particularly given the need to seek Saudi Arabia’s cooperation in reducing oil prices ahead of the U.S. midterm Congressional elections. Clearly, reducing oil prices was a top priority for Washington to the extent that it even initiated contacts with oil-rich Venezuela, a country under U.S. sanctions.
Biden left Saudi Arabia satisfied that Riyadh would at least increase its production until the end of the year. Indeed, Riyadh obliged and increased its oil production by 100,000 barrels per day thereby driving the price of a barrel of oil downward from around $130 in March 2022 to under $90 in October.
But the OPEC Plus decision could not have come at a worse time: the midterm Congressional elections are only a few days away and polls indicate a Republican sweep or that the Republicans will control the House of Representatives and may well gain the majority of the Senate. It is no surprise that the U.S. response was swift and sharp, claiming that Saudi Arabia sided with Moscow against Washington in their ongoing feud over Ukraine. The U.S. Congress threatened to revive legislation intended to punish Saudi Arabia, and Biden—a Democrat—declared that there will have to be consequences to the OPEC Plus decision.
In this connection, it is important to put matters into perspective. In 2020, at the peak of the Covid crisis when oil prices were plummeting, Russia was prepared to sustain even lower prices (its budget was based on the price of oil in the range of $30-$40 per barrel, and probably wanted to drive U.S. shale producers into bankruptcy), while Saudi Arabia needed a $70-$80 price range to balance its budget. When Moscow refused to go along with Riyadh’s request to cut production to maintain prices at the level it desired, the Saudis started to sell oil at a 30 percent discount, sending the price into a downward spiral. The Russians had no choice but to accommodate the Saudis. In short, this means that Saudi Arabia is now securing its own national interests with little regard to those of major powers.
Historically, relations between Saudi Arabia and the United States. had been based on a quid pro quo: using Riyadh’s enormous clout in the oil market to ensure stable and reasonable energy prices in return for Washington’s military protection. This was especially true throughout the Cold War, both Gulf wars and until fairly recently. That is, with the exception of the 1973 oil embargo, when Saudi Arabia decided to punish Washington for its blatant military support for Israel.
This arrangement served the interests of both the Saudis and the Americans, until doubts began to emerge as to the security assurances the U.S. was prepared to provide the Kingdom.
First came the “Arab Spring” in 2011. The conviction in Saudi Arabia was that the Obama administration failed to protect Egypt’s Mubarak regime, a close ally of both Riyadh and Washington. This was seen in Riyadh as opening the door to a takeover by the Muslim Brotherhood—considered a threat to Saudi rule. Then came President Barack Obama’s “Pivot to Asia” in 2015 signaling that the Middle East was losing its strategic value to the U.S.
Soon after in the same year, Riyadh viewed the Washington-backed JCPOA Iran nuclear deal as inimical to its interests.
In parallel came the Houthi missile and drone (both provided by Iran) attacks on Saudi infrastructure in 2015, which culminated in 2021 in the missile attacks on the Saudi Arabian Oil Company’s (Aramco) oil facilities. Finally, in 2021 the U.S. withdrew in humiliation from Afghanistan.
All of these developments were considered by Riyadh to be threats to its national security. However, what probably had the greatest impact on Saudi Arabia was the fact that instead of showing support in the wake of the Aramco attack, the U.S soon withdrew its Patriot anti-missile defense batteries, although a year later it allowed third parties to transfer Patriot batteries to the Kingdom .
That Washington chose to be neither a bystander as in the case of Mubarak’s ouster, nor a strong advocate for the Kingdom as in the case of the JCPOA and, more importantly, the fact it did not take tangible action to protect Saudi Arabia in the wake of the Aramco attacks, only served to shake Riyadh’s confidence in the U.S. commitment to its security. The chaotic withdrawal from Afghanistan merely underlined the precarious nature of the U.S. commitment.
In this regard, it is important to note that U.S. actions—or, for that matter, inactions—took place against a series of statements by successive presidents which reflected a negative disposition towards Saudi Arabia. These statements did not go unnoticed in Riyadh.
Obama, for example, referred to Arab Gulf states (which, of course, includes Saudi Arabia) as free riders, thereby undermining the quid pro quo that has underpinned this relationship for decades. A careful examination of the article on the “Obama Doctrine”, which was based on a series of interviews with the then U.S. president published in the Atlantic Magazine in its April 2016 edition, cannot but lead to the inescapable conclusion that he was hardly complimentary to Saudi Arabia.
President Donald Trump echoed Obama’s position and even went further when he announced publicly that he had informed King Salman that his rule would not survive two weeks without U.S. support. Later, however, Trump announced that the U.S. was “locked and loaded” to defend Saudi Arabia.
But the damage had already been done.
In April 2020, Trump reportedly informed Saudi Crown Prince Mohammed Bin Salman that unless OPEC started cutting oil production, he would be powerless to stop lawmakers from passing legislation to withdraw U.S. troops from the Kingdom.
For his part, during his election campaign in November 2019, Biden had declared that “we were going to, in fact, make them [Saudi Arabia] pay the price, and make them, in fact, the pariah that they are”.
Shortly after his election as president, Biden released the report that named Crown Prince Mohamed Bin Salman as having sanctioned the murder of Saudi journalist Jamal Khashoggi, and refused to deal with the crown prince.
In short, successive U.S. administrations, whether Democratic or Republican, have progressively demonstrated minimal appreciation for Saudi security concerns. In fact, Washington has been giving the impression that it retained the prerogative to decide what constituted a security threat to Saudi Arabia. And based on its own assessment, it would decide on how and when to protect Riyadh.
The Americans argued that they were taking into account Saudi security interests in its efforts to revive the JCPOA. But Washington showed no interest in directly involving Riyadh in the negotiations.
When it came to the war in Yemen and the threat the Houthi’s posed to Saudi Arabia, they argued that the war was of Riyadh’s making, and Washington would help resolve it politically.
The American argument about the war in Afghanistan was that it had become a “forever war” with no direct bearing on U.S. national security and therefore the commitment needed to come to an end. And in any case, U.S. interests with Saudi Arabia cannot be compared with those regarding Afghanistan.
All of these arguments make sense from the U.S. perspective. But they found no resonance in Riyadh.
Insofar as Afghanistan is concerned, American blood and treasure were spent over a period of 20 years only for the U.S. to allow the Taliban government which it had overthrown in the first place to return to power.
So for Riyadh the question was: how far was Washington prepared to go to protect Saudi Arabia?
The world has changed: the U.S. may still be the most powerful country but it no longer commands the overwhelming power it enjoyed over a span of several decades, particularly when it comes to the global economy.
From the Saudi perspective, U.S. security assurances were no longer reliable.
Consider Iraq, a country the U.S. invaded and occupied but where it has been incapable over the past two decades to reduce Iranian influence; this is a matter of grave concern to Riyadh.
And to add insult to injury, the U.S. is implicitly pushing Israel to compensate for Washington’s decision to scale back its security commitments.
It has done so without the slightest appreciation to the sensitivities that this may cause Saudi Arabia.
The United States has in the meantime been supporting Israel in its quest to establish a regional security architecture that gives Tel Aviv the upper-hand—a Middle East mini-NATO, anchored around a regional air-defense system of which Israel would be the main provider, anchor and beneficiary. Second on the list of Riyadh’s grievances— following Washington’s ambivalence to Saudi security concerns—is energy market stability.
Both Saudi Arabia and the U.S. have a common interest in stable energy markets to provide both developing and developed countries with sufficient predictability to efficiently plan their future. The U.S. insists that such a market be governed at a price level reasonable to the West’s economic well-being. Riyadh, on the other hand, wants to ensure that the price is maintained at an adequate level to fund its ambitious development plans.
In addition to the widening variance about the “reasonable” price of oil, issues relating to what Saudi Arabia, and many other countries, considers to be double standards by the U.S. have also had significant impact on Washington’s credibility in the region.
The U.S. is a champion of the market economy, including when it comes to energy. It has long maintained that the rules of supply and demand are the most efficient mechanisms to provide long-term stability for the energy market.
However, as we have witnessed lately this position can be easily jettisoned when it runs against U.S. interests.
The United States has resorted to market-disruptive instruments such as sanctions, whether primary or secondary, and most recently the “price cap” on Russian oil exports to protect its interests.
While ostensibly targeting Russia, the cap—if successfully implemented—will not only disrupt the stability of oil markets, but will have long-term implications for other oil producers, including Saudi Arabia. What would prevent Washington from using it anytime in the future if it decides that it wants to punish Riyadh?
Curtailing gas imports from Russia as the result of the war in Ukraine has allowed not only international oil companies but also Norway to reap windfall gains. In fact, the U.S. is making handsome profits from selling liquified natural gas (LNG) to Europe. American multinational oil giant ExxonMobil, for example, has made $23.3 billion in the first six months of 2022 compared to $7.4 billion during the same period last year, pushing up the value of its shares by 55%.
Meanwhile, Oslo expects to bring in about $109 billion from the petroleum sector this year—$82 billion more than in 2021, pushing its sovereign fund to the 1 trillion dollar mark .
Furthermore, the price cap on Russian oil exports is a clear attempt at shifting power away from the producers to consumers, particularly in the West.
This is an additional disregard for Saudi Arabia’s long-term economic security.
It is therefore a fair question to ask why the U.S. is not considering how to mitigate the effects of the astronomical rise in oil and gas prices by taxing it’s oil companies and forcing Norway to channel at least part of its windfall gains to alleviate the difficulties faced by its European partners, say by establishing a fund to help the most vulnerable European countries.
Why should Saudi Arabia and other members of OPEC Plus bear the major burden of alleviating the problems caused by the rise in gas and oil prices. This is all happening as U.S. security guarantees for Saudi Arabia and its allies have become questionable.
How is Riyadh to react?
Other Global Players
Saudi Arabia needs to take into account the overall international scene, particularly when one factors in ascendant China. There is also the increasing prospects of a protracted conflict in Ukraine and therefore the distinct possibility that the world would experience a new Cold War, with the West on one side and Russia and possibly China on the other.
The question then becomes for Riyadh—in view of the likelihood of a new Cold War with its adverse consequences for the international system, the questionable U.S. security assurances and disregard for Saudi long-term economic interests—what benefits would Saudi Arabia gain by taking sides? Is it not better to adopt a balanced policy?
Both the U.S. and Saudi Arabia will continue to need and depend on one another for the foreseeable future. But this time around, the difference is that Riyadh can no longer totally rely on Washington for either its security or managing the energy market.
It has come to realize it has other options to secure its interests. So the relationship will continue to be a strong one, but it will be subject to a different set of rules.
Already it seems there may be some movement in this regard. In spite of the administration’s declaration that “there will consequences” for the OPEC Plus decision, the Washington Post reported on November 5, that the US Central Command, reacting to intelligence reports that Iranian missile and drone attacks on targets in Saudi Arabia were imminent, launched warplanes based in the Gulf towards Iran as a show of force. On the other hand, the Saudi Oil Minister indicated that his country may increase oil production once again to counter the effects of the EU sanctions that are expected to kick-in by the end of the year.
Of course, Washington has the option to further reduce its security commitments to Riyadh. But it would do so at a risk. A collapse of security in the Gulf serves no one’s interest. It merely opens the door to U.S. adversaries to increase their influence in the region.
Ambassador Ramzy Ezzeldin Ramzy served as the United Nations Assistant Secretary General and Deputy Special Envoy for Syria ( 2014-2019). Before that he served as Senior Under Secretary at the Ministry of Foreign Affairs of Egypt, Ambassador to Germany, Austria and Brazil. He also served as Permanent Representative to the United Nations and other international organizations in Vienna.Read More
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