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The Biden administration is considering retaliatory action against longtime ally Saudi Arabia after the kingdom sided with Russia to cut oil production.
President Biden told CNN on Tuesday there would be “consequences” for Saudi Arabia after the OPEC+ group of oil-producing countries announced last week a Reduction of 2 million barrels per day in oil production.
Biden declined to specify what action he was considering.
A drastic reduction in the amount of oil on the market could drive up fuel prices in a turbulent year at the pumps.
The Saudi-led OPEC+ decision has created a serious rift in US-Saudi relations, which have seen their share of ups and downs over the past seven decades.
“This move will clearly strain an already poor relationship between the United States and Saudi Arabia and trigger quite a significant backlash in both countries. sides of the aisle in Washington, DC,” says Jason Bordoff, director of the Center on Global Energy Policy at Columbia University.
Saudi Arabia’s Foreign Ministry issued a statement late Wednesday dismissing allegations that the oil supply cut was “politically motivated against the United States” or that the Saudis were “taking sides” in an international conflict – apparently doing reference to Russia’s invasion of Ukraine.
He said the oil decision was “based solely on economic considerations” and that the US-Saudi relationship “serves the common interests of both countries”.
Biden lobbied against cutting oil supplies
It wasn’t just the magnitude of OPEC+’s oil production cut. It was also the time – less than three months after Biden visited Saudi Arabia to lobby against such a cut, and just before the US midterm elections where prices at the gas pump could have a effect on voters.
“It seems punitive against the Biden administration,” says Jonathan Panikoff, an Atlantic Council Middle East security expert and former US intelligence analyst on the region.
“I think it’s hard to think otherwise because the Saudis aren’t naive about the American political situation,” Panikoff said. “That may not have been the main reason for doing it, but they were absolutely thrilled to do it.”
Saudi Arabia braces for lower fuel demand
Firas Maksad, a senior fellow at the Middle East Institute, a DC think tank, says Saudi Arabia has legitimate business reasons for the cut. This is seek higher fuel prices now in case a global recession reduces demand later.
This week, OPEC – which stands for the Organization of the Petroleum Exporting Countries – lowered its forecast demand for crude oil in the coming months due to global inflation, soaring interest rates and geopolitical tensions.
Maksad said U.S. officials were engaged in a “full press” with their counterparts in the Gulf region ahead of the Oct. 5 OPEC+ meeting. He says there was an understanding that the US administration was pressuring oil cartel members.
“It’s just that the willingness to acquiesce to domestic American politics — the administration’s domestic political considerations — wasn’t there,” he says.
Russia enjoy a seat at the table
Vladimir Simicek/AFP via Getty Images
It was one thing that America’s partner, Saudi Arabia, was leading the campaign to cut production. Pouring salt into the administration’s wounds was having Russian Deputy Prime Minister Alexander Novak, who is sanctioned by the United States, sitting at the table when the cuts were announced. Saudi Arabia and Russia co-chair OPEC+.
The United States and many of its allies have tried to cut Russia’s oil and gas exports, which helps support the country’s economy. Oil production cuts will drive up the price per barrel and pump more revenue into the Kremlin’s coffers to help pay for war in Ukraine. Saudi Arabia’s decision to partner with Russia to cut production is seen as undermining US efforts to limit Russia’s oil revenues.
“Many in DC see the Saudis now aligning themselves with Russia at a time when Russian troops are killing Ukrainians and the cut in Russian energy exports is plunging much of the world into an energy crisis,” Bordoff said.
Congressional Democrats are calling on Biden to take tough action on Saudi Arabia. Including legislation introduced by Representative Ro Khanna of California and Senator Richard Blumenthal of Connecticut to stop selling weapons to the kingdom. And Chairman of the Senate Foreign Relations Committee says the United States should “freeze all aspects of our cooperation with Saudi Arabia”.
But the Atlantic Council’s Panikoff says freezing arms sales to Saudi Arabia may not be the wisest move because it could allow China to fill that vacuum. Rather, he says the US needs to be “smarter” in its approach to the Saudis.
It goes back to the Crown Prince
Panikoff says the OPEC+ decision rests with the kingdom’s powerful de facto leader, Crown Prince Mohammed bin Salman.
“I don’t think we’ve fully embraced the idea that he’s a different leader than we’ve ever dealt with. And so we’re going to have to have a different relationship,” he said.
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The crown prince is a transactional leader, says Panikoff, and the United States will have to decide whether it wants to spend time and energy rebuilding its strategic relationship with the kingdom or become more transactional as well. Panikoff says that could affect Saudi Arabia’s security guarantees.
“Maybe we’re not selling the most advanced planes,” he says. “Maybe we take out some Patriot batteries and say, ‘Look, we recognize your security, we’re not trying to diminish it. … We must also balance our security objectives. “”
Panikoff thinks the crown prince’s decision to tie himself so closely to Putin with the OPEC+ decision is a faux pas.
But Maksad, with the Middle East Institute, says the Gulf region is no longer beholden to the United States and has the right to seek other options.
“And so they’re building bridges to China, which, by the way, accounts for more than a quarter of Saudi Arabia’s oil exports,” he says, “and also to Russia, which had somehow so expanded its role in the Middle East.”