Saudi Arabia: Playing Both Ends…

Summary: although the fundamentals of Saudi relations with the US seemingly remain solid, the energy market’s current dynamics and longer-term prospects mean that Washington can no longer depend on Riyadh to bend to its will on oil output, thereby potentially putting in jeopardy the original cornerstone in relations. 

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2 thoughts on “Saudi Arabia: Playing Both Ends…”

  1. Alastair, thanks again for a most interesting read. What I don’t understand is why Saudi Arabia needs to court and keep Russia in OPEC+. Whether in or out of OPEC+, Russian export of oil is going to face a number of obstacles – the need to discount, higher insurance premiums, technical difficulties in maintaining output, the need to find new markets – supply and demand variables none of which it seems to me are ameliorated by the Russians being kept onside by the Saudis within OPEC+. Both the Kingdom and the UAE seem obsessed by keeping Russia a friend, without consideration of their macro-economic inter-dependency with the West, nor any recognition of the long-term reputational damage to their standing in the West of siding with the devil.

    1. Thanks for the very pertinent comments, Jonathan, on which I would offer the following thoughts:

      1. In principle at least, if one is running a cartel it makes sense to command as much of the global supply side as possible. Russia is and remains a major producer with significant reserves. It is by no means clear that embargos, such as they are, will be in place for ever.

      2. I doubt very much that the Saudis at least see Russia as ‘the devil’. For starters, Vladimir Putin does not get preachy with them over human rights, civilian deaths in Yemen etc etc.

      3. I agree that there is little to be gained in economic terms through ties with Russia relative to the West. But this didn’t stop Kingdom Investment from putting US$500m or so into Russian energy companies around the time of the invasion. In other words, the Saudis clearly see some economic benefit in their ties with Russia in terms of both outward and, I guess, (oligarch) inward investment.

      4. The Gulf states, in common with many others, do not regard the US as a reliable ally (think Hosni Mubarak for starters) whereas, in this region at least Russia is seen as one, not least thanks to its commitment to the regime in Syria. There is a strong sense that the US is a long way away and all too likely to remove itself even further at some stage, whereas Russia is a (still powerful in some senses) nextdoor neighbour.

      5. The Saudis are hardly alone globally in hedging as far as Ukraine is concerned. I very much hope that Mr Biden doesn’t actually believe the nonsense he comes out with from time to time to the effect that the world is united against Russia. Other US allies are more or less in the same camp starting with Turkey and, arguably (as it is not formally a US ally and does have a long non-aligned history and historically close relations with Moscow) India.

      6. Last but by no means least, so far they have got away with it! Indeed, as Jake Sullivan implicitly conceded around the time of Joe Biden’s visit when he stated publicly that the US needed to be proactive anywhere where it perceived its security interests to be threatened, cosying up to Russia since early this year seems so far to have brought with KSA more upside with the US (plus France and the UK, arguably, as their leaders have also courted MbS) than downside. This may not always remain so; but, to date at least, nothing which MbS has done seems to have had any lasting significant material impact on the Kingdom’s relations with the West.

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