Will Biden punish Saudi Arabia for oil cuts?
The Biden administration could review relations between the United States and Saudi Arabia after OPEC cuts in oil production. Arms sales are also at stake. All the details
Interviewed by CNN , US National Security Council Strategic Communications Coordinator John Kirby anticipated President Joe Biden's intention to recalibrate relations with Saudi Arabia following the OPEC + announcement – the cartel oil company led by Riyadh and Russia – on cuts in oil production .
The National Security Council is an advisory body to the White House on national security and foreign policy issues. Saudi Arabia – beyond systemic frictions and divergences – is an important American partner on security in the Middle East, and maintaining this relationship is strategically useful for Washington to allow its (partial) disengagement from the region.
THE (EXTREME) PROPOSALS OF THE DEMOCRATIC PARTY
Kirby said he believes that “the president [Biden, ed ] has been very clear that this is a relationship that we must continue to reevaluate and that we must be willing to revise. And certainly, in light of OPEC's decision, I think this is his point of view, and that he is willing to work with Congress to reflect on what this relationship should be like in the future ”.
In recent days, the Democratic Party has received various proposals for extreme retaliation against Riyadh. Congressman Tom Malinowski, for example, called on the Biden administration to reduce the American military presence in Saudi Arabia in a "tooth for a tooth" perspective. Chuck Schumer, the head of the Senate majority, criticized the Saudis for allying themselves with Vladimir Putin's Russia. The chairman of the Senate Foreign Affairs Committee, Bob Menendez, said the United States should sever ties with Riyadh altogether.
WHAT WILL BIDEN DO AGAINST OPEC + CUTS?
OPEC + 's announcement to reduce its oil production by 2 million barrels a day was very badly received by Biden, who said he was "disappointed" by the group's decision. A decision that not only cancels the reduced – practically insignificant – increases in output agreed by the cartel shortly after the president's visit to Saudi Arabia last July; but above all it risks increasing international crude oil prices a few weeks before the mid-term elections. The cost of fuel, which is linked to that of oil, is a major concern of voters.
It is unclear what the Biden administration's response to OPEC + cuts will be. In recent months, to encourage the lowering of domestic gasoline prices, a large number of barrels of oil from the strategic reserve were released on the market. The continuation of this policy does not seem likely, although conflicting statements have come from the White House.
HOW IS THE PRICE OF OIL
Despite the OPEC + announcement, however, the price of crude oil has started to fall again: this is perhaps a sign that the market's fears of a global economic recession outweigh those of the shortage of supply. On Tuesday the prices of Brent and WTI – the European and American benchmarks, respectively – both fell by 2 percent, reaching 94.2 and 89.3 dollars a barrel.
THE POLITICAL IMPACT FOR SAUDI ARABIA
The Biden administration may decide to remove the United States from Saudi Arabia, perceiving it as an untrustworthy partner. Such a move would have the effect of drastically modifying Washington's foreign policy in the Middle East, which has one of its pivots in Riyadh.
It even seems that the White House is questioning the supply of weapons to the country, when only in August it approved a possible sale of Patriot MIM-104E surface-to-air missiles worth 3 billion dollars. Usually, these arms sales respond to the goal of containing Iran's military presence – hostile to Saudi Arabia, Israel and the United States itself – in the Middle East.
A CALCULATION ERROR?
In short, the Biden administration could give a political response to an economic move, such as the OPEC + cut agreement.
The cartel's decision, in fact, while damaging the American interest and supporting the Russian one, does not respond to “punitive” logic towards the White House but to market valuations . Foreseeing the arrival of a recession that would collapse the demand and value of crude oil, that is, OPEC + has chosen to act in advance, trying to reverse the trend in barrel prices to secure richer revenues now, before the deterioration of the global economic framework.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/energia/joe-biden-rapporti-arabia-saudita/ on Wed, 12 Oct 2022 14:00:41 +0000.