Saudi Arabia and Oil: Between the US and Russia

President Joe Biden and Secretary of State Anthony Blinken in a meeting in Jeddah, Saudi Arabia. Photo: Doug Mills / The New York Times

Since the Russian invasion of Ukraine, Riyadh has refused to condemn the Kremlin and rejected American and European demands to increase oil output despite the current energy crisis. Four weeks ago, the OPEC+ announced its decision to cut oil production by 2 million barrels per day, which many world leaders including President Joe Biden have deemed as an endorsement of Russia. What was once a resolute alliance between Saudi Arabia and the US has faded in recent years, and current events have only hastened this process. To address this topic, the Woodrow Wilson Center held a panel on November 10, 2022 at 10:00 am EDT for experts to discuss global oil production and US-Saudi tensions since the beginning of the Russia-Ukraine conflict.

David Ottoway, former Washington Post reporter and fellow at the Wilson Center, prefaced the talk by presenting several points about the current importance of Saudi Arabia in the global arena. Ottoway listed several legislations set to be enacted by the EU on December 5th. These included a ban on ship-borne Russian oil amounting to a deficit of about 3 million barrels a day, another ban on companies issuing insurance to ships carrying Russian oil, and a cap on prices for Russian oil bought by EU countries. These events will have a large impact on global energy supply and result in a cut of oil exports worldwide, which makes the topic of Saudi Arabia even more pressing.

Steven Kalin, Wall Street Journal journalist covering the Middle East, explained Saudi sentiments and the reasoning behind the OPEC+ oil cut. In speaking to Saudi officials as a reporter, Kalin observed that they maintain that the recent OPEC+ decision is purely an economic move, saying that they “don’t want to sacrifice their future prosperity” and were trying to diversify the economy away from strictly oil. There was also frustration in Riyadh regarding the US-Saudi relationship being reduced to oil and security, when Saudis have been aspiring for it to grow into other sectors. Moreover, many Saudi officials are unhappy with the constant sense of reassessment and broad uncertainty about US commitment to the region.

Next, Guy Laron, a Wilson Center fellow and professor at the Hebrew University of Jerusalem, discussed whether recent events bring the possibility of an emerging Russia-Saudi alliance or instead demonstrate a limited opportunistic partnership. Laron expressed that he believes it is the latter. During the Putin era, Laron explained that Russia became isolated in the world arena and needed to form new alliances. Right now, Russian and Saudi interests align which is why they entered a partnership to regulate, but if the conditions in the oil market change, the partnership can unravel quickly.

Vladimir Putin and Saudi Crown Prince Mohammed bin Salman greeting each other. Photo: Reuters 

The conversation returned to Ottoway, who discussed the presidential practice of pressuring Saudi Arabia to alter their oil production for political interest. He recounted how President Bush asked the Saudis to cut oil production in order to improve his public standing, as the low oil prices were hurting American companies. Additionally, Ottoway discussed the Trump administration’s requests for Saudis to alter production on two occasions. Currently, Biden, despite previously declaring his intentto turn the Saudi Crown Prince into an international pariah in retaliation for the murder of journalist Jamal Khashoggi, traveled to Riyadh in July to ask for higher oil production. Instead of aiding Biden, however, the Saudis cut oil production. This situation with Saudi Arabia, Ottoway added, has neither hurt or helped Biden politically just like with other presidents. He finally concluded the recursive presidential practice of asking Riyadh to alter oil production was a “total waste of time,” as Saudis do not necessarily adhere to American requests nor do these requests alter domestic presidential approval levels historically.

The final speaker, Bessma Momani, Professor of Politics at the University of Waterloo and Senior fellow at the Center for International Governance and Innovation, concluded the conversation by explaining the macroeconomics of the situation and how the OPEC+ decision was unsurprising to her. She described the renewed sense of nationalism in Saudi Arabia in recent years and how the Biden administration overestimated Saudi loyalty to the US by assuming they would simply concede to American interests. According to Momani, Saudi Arabia, with its large population of young people hungry for job opportunities, has serious ambitions to take charge of their economic development. She criticized the Biden administration for not acknowledging these changing interests of Riyadh and assuming relations would remain as they were historically. While the US certainly was and still is the hegemonic seller of oil and military supplies, the Saudis also remains the number one buyer of weapons. Being in such a powerful position, Riyadh has little reason to sacrifice national economic development or compromise for their demands, Momani argued. As she put it, the Biden administration failed to read energy markets and Saudi sentiments and “embarrassed itself.” From traveling to Riyadh in July to operating under the pretense that Saudi leadership would always remain aligned with them, the White House failed on foreign and economic policy towards Saudi Arabia in the lead up to our current energy crisis.