Strategic Ties on the Line as Biden Vows ‘Consequences’ for Saudi Over OPEC+ Oil Cut
White House says slash in output will help OPEC member Russia finance its war in Ukraine as outraged US lawmakers urge Congress to approve ‘Nopec’ legislation that would allow for price-fixing cases against oil cartels
US President Joe Biden has vowed that “there will be consequences” for American-Saudi relations after the OPEC+ oil cartel announced last week that it would cut petroleum output over U.S. objections beginning November 1, raising fears that oil prices could skyrocket.
The announcement by the Saudi-led OPEC+ was widely seen in Washington as a stab in the back of President Biden over his continued support of Ukraine following its invasion by fellow OPEC member Russia in February. White House officials say the slash in output will help Russia pay for the war.
Further vocal criticism of the desert kingdom is coming from outraged US lawmakers, many of whom are calling for a freeze on cooperation with the Saudis.
President Biden’s remarks Tuesday came a day after Bob Menendez, the Democratic chairman of the influential Senate Foreign Relations Committee, called for Washington to halt all cooperation with Riyadh, including weapons deals.
Menendez said the kingdom had decided to “underwrite” Russia’s war in Ukraine with a move he denounced as a concession to Moscow that would hurt the global economy.
“The United States must immediately freeze all aspects of our cooperation with Saudi Arabia, including any arms sales and security cooperation beyond what is absolutely necessary to defend US personnel and interests,” he said.
“As chairman of the Senate Foreign Relations Committee, I will not greenlight any cooperation with Riyadh until the kingdom reassesses its position with respect to the war in Ukraine.”
Much of US arms sales to Saudi Arabia have been made with regional threats by primary foe Iran in mind.
“Saudi Arabia has multiple options regarding the purchase of weapons, but the United States of America remains the most important strategic ally,” says Mohammed al-Bishi, a Saudi journalist specializing in economic affairs.
Other US lawmakers are calling on Congress to approve “Nopec” legislation, which would empower the Department of Justice to bring price-fixing cases against oil cartels, something OPEC is often accused of being, and stripping them of sovereign immunity.
The Biden administration could hit back with other immediate punitive measures, such as canceling its participation in a working group with the Gulf Cooperation Council on confronting Iran, which is set to take place on October 17. American officials may also boycott an investment conference planned in Riyadh on October 25-27.
The Biden administration on Thursday accused Saudi Arabia of “coercing” smaller oil-producing OPEC members into agreeing to production cuts that Riyadh knew would “increase Russian revenues and blunt the effectiveness of sanctions” aimed at punishing Russia for its invasion of Ukraine.
“We presented Saudi Arabia with analysis to show there was no market basis to cut production targets, and that they could easily wait for the next OPEC meeting to see how things developed,” National Security Council coordinator John Kirby said in a statement. The Saudis have rejected a request to delay the cuts in production.
Kirby said the move was “a short-sighted decision that benefitted Russia, at a time when nobody – in any capacity – should be trying to benefit Vladimir Putin.”
He reiterated this warning Tuesday, stressing that Biden is “willing” to work with Congress to redefine relations.
President Biden and his Democratic Party have been benefiting from falling gas prices lately, but the OPEC+ decision comes four weeks before midterm elections that could change the balance of power in the House and Senate and a time when inflation has emerged as a top issue for voters. Some say the step is meant to undermine the president.
Saudi officials insist that the decision was purely economic driven “to maintain a sustainable oil market,” and denied that it was intended to embarrass or target the president or Washington.
Adel al-Jubeir, Saudi Arabia’s minister of state for foreign affairs and a former ambassador to the United States, told CNN on Wednesday that the U.S.-Saudi relationship was “very far” from broken, and was “very robust,” including “almost 80,000 Americans living and working in Saudi Arabia” and “a very strong trade and investment relationship.”
The kingdom’s foreign minister Prince Faisal bin Farhan Al Saud also told the Saudi-owned Al Arabiya channel on Tuesday that his government saw the cuts as “purely economic” and said that they were unanimously approved by OPEC+ member states.
“OPEC+ members acted responsibly and took the appropriate decision,” Prince Faisal told Al Arabiya.
Bishi tells The Media Line that the American angry reaction is a “populist” response and was “uncalled for.”
“Riyadh has no premeditated intention to harm others, and its policy has never been one of harming anyone, and it is a responsible policy,” he says.
He maintains that most of the decisions by OPEC and OPEC+ are adopted or taken based on technical criteria and studies related to the volume of supply and demand in the global market.
“The decisions of OPEC+ have proven over the past years that they are correct and serve the market, the producing parties and consumers, and that there are fair prices that stimulate the growth of the global economy.”
Bishi adds that the recent decision to reduce output came as a result of the expectation of a global recession.
He argues that oil prices are now declining, which reinforces the validity of the decision.
“Since its establishment, OPEC+ has been accustomed to facing campaigns from the West and major consumers in the world to protect their interests only. And OPEC is always looking for the interest of the global economy in general, in addition to preserving the interests of the members of OPEC, and this is a legitimate right for it.”
Gulf states account for almost 50% of OPEC production, Saudi Arabia is leading the chart with 21.5%, followed by Iraq at 11.7%, UAE at 8.9%, and Kuwait at 8.2%. Iran’s OPEC share is 16.8%.
The US and Saudi Arabia have been strategic allies for over eight decades, as both countries cooperate closely on regional issues such as security and energy. But relations between Washington and Riyadh cooled under President Biden, who has publicly criticized the kingdom’s human rights record.
There is small trust between President Biden and Saudi Arabia’s de factor ruler, Crown Prince Mohammed bin Salman. In fact, many Arab leaders are dubious about US support after the Arab Spring of a decade ago, when many accused Washington of abandoning loyal Arab leaders like Egypt’s Hosni Mubarak, and feel that President Biden’s efforts to revive the landmark Iran nuclear deal will jeopardize their national interests.
Aaron David Miller, former advisor on the Middle East at the US State Department and negotiator for the Israeli-Palestinian peace process, tells The Media Line that strategic allies should generally have shared values on issues like freedom of the press, protecting minorities, governance, and transition of power, with each side enjoying with “broadly speaking democratic qualities.”
“The US and Saudi Arabia really don’t meet those requirements,” he says. “There’s no value coincidence, despite [bin Salman’s] reforms, which have been quite impressive. The price has been a degree of repression and authoritarianism that’s actually quite new to Saudi kings. And there’s what I would argue is an episodic coincidence of interests.”
He says that “Saudi Arabia is important to the United States but a more problematic partner.”
Miller isn’t calling for the end to or undermining of Saudi-US relations, but is advocating a new approach and to view ties “in perspective.”
“If the relationship is going to survive, there has to be a measure of reciprocity,” he says.
President Biden promised during his campaign ahead of the 2020 US elections that he would hold Saudi Arabia responsible for its human rights abuses, including the murder of Washington Post journalist Jamal Khashoggi in 2018. US intelligence deems the crown prince as responsible for the grisly killing and dismemberment of the dissident journalist.
Miller says that the timing of the announcement to cut production was no coincidence and echoes the claim that the decision just weeks before the crucial midterm election was planned by MBS to humiliate Biden.
“I would argue that [with] what happened last week at OPEC, [it] was lost on no one that it happened three days after the fourth anniversary of the murder of Jamal Khashoggi. In my judgment it’s a reflection of what’s wrong with the relationship,” he says.
OPEC is “going to turn on gas prices, which are already rising,” he adds, “during one of the greatest international crises since the end of the Second World War, and [with] the US trying to do all it can to stop Putin’s aggression against Ukraine, weeks before an election that’s likely to turn very badly for the current administration.”
He argues that the move “was driven by Saudi Arabia and Russia, there’s no question about it. To take this particular step is in my judgment a sort of A through Z demonstration of why in effect we are not allies.”
A visit by President Biden to Jeddah in the summer drew scathing criticism; an awkward fist pump with the crown prince was widely seen as an abandonment of his promise to make Saudi Arabia a “pariah” and helping to salvage the reputation of a tarnished prince in exchange for numerous, but limited gains.
The aim of the trip was to secure more oil flowing into the global markets and help drive down prices.
But the young leadership of these Gulf states is different from their fathers of previous eras: They are more sophisticated and mature politically, as well as financially and socially savvier. They are depending on themselves to manage their affairs; putting their own interests above all else.
“MBS is looking way beyond Joe Biden, he’s looking for [former US president Donald] Trump’s return or the return of a Republican administration that won’t ask the [same] kinds of questions on human rights,” says Miller.
Meanwhile, Sheikh Mohamed bin Zayed al-Nahyan, the president of OPEC-member UAE, met Tuesday with President Putin in Russia.
The visit also sparked outrage among the UAE’s Western allies, who have worked relentlessly to isolate Putin.
“Mohammad bin Zayed goes off to meet Putin within 48 hours of some of the worst Cruise missile attacks that Putin has launched against Ukrainian civilian targets and there’s a picture of the two smiling,” says Miller.
But some analysts saw the visit as another sign of shifting alliances in the region.
Bishi says the whole world is experiencing changes, and it is natural for every country to pay attention to put its own interests first and then the interests of its allies.
“What is happening, in my opinion, is that the Gulf states, and Saudi Arabia in particular, will remain the strategic partner and political and economic ally of the United States unless the United States takes steps regarding the threats that may affect Saudi Arabia,” he says. But, he adds, “it is possible that there will be new alliances in the world that serve the parties.”
Miller says the Gulf leaders have recognized their own independence and have a greater level of confidence, and they are younger and more independent.
“MBS is unique, he’s idiosyncratic, he’s different than any Saudi king and he’s different than any other ruler in the Arab world.”
He says Washington stands at a crucial junction with its ties with the kingdom and must be cautious about the steps it takes going forward.
“I don’t think it’s on the verge of collapse, but the administration needs to look through carefully what it needs to do now. Does it want to punish Saudi Arabia or do something that would alter its behavior?”