Saudi Arabia and the U.S., two longstanding allies, are turning away from each other. The Gulf oil powerhouse is moving closer to Russia and China.
A tectonic plate just shifted. On Wednesday, Saudi Arabia, a longstanding and loyal ally of the U.S., moved closer to Vladimir Putin’s Russia. In this particular period of war in Ukraine waged by Russian troops, this is an act of major defiance toward the U.S., which, for its part, chose to mobilize its forces – in manpower, weapons and cash – to support the country under attack. Moreover, Riyadh didn’t vote for any U.N. resolution against Russian aggression.
The rebellion came through crude oil. On Wednesday, the Organization of the Petroleum Exporting Countries and their allies, known as OPEC+, decided to slash their production by 2 million barrels per day starting next month. To stabilize the price of oil, they swear.
Admittedly, after reaching a peak of $140 in March in the wake of the war in Ukraine, the price of a barrel kept tumbling over the past few months. Last week, it was hovering around $86. It gained $4 on Wednesday and lost $1 on Thursday.
Accounting for 60% of global exports, the oil cartel claims it fears a price collapse amid a recession or slowdown. In the U.S., the largest producer and consumer of oil, demand has indeed dropped by 6% in one year.
In the past, no decision was taken within OPEC without the prior approval of Saudi Arabia, as its share of production is so prevalent within the bloc. It’s also the only country with excess capacity, able to open the tap and inject more oil into the market. Riyadh has always played the American card when other members were arguing for higher prices.
This step not only marks a move away from the U.S. and a rapprochement with Russia. Saudi Arabia has also moved closer to China, which over the years has become its main market. Moreover, in recent weeks, the Saudis have taken a dim view of the American initiative to impose a cap on the price of Russian oil, which they believe would inevitably apply to all producers.
But oil is not the only issue. Relations between the U.S. and Saudi Arabia have cooled somewhat over the past few years. Then-candidate Joe Biden had labeled the Gulf giant a “pariah state;” in his view, there was no doubt that Crown Prince Mohammed bin Salman was directly involved in the murder of Saudi journalist Jamal Khashoggi in Istanbul in October 2018.
As president, Biden hasn’t changed his tune. Above all, he told anyone who would listen that Middle Eastern policy would henceforth be decided in Washington. And not in Riyadh, which sees itself as the regional power.