US to reassess Saudi ties

United States President Joe Biden is reviewing relations with Saudi Arabia following its decision with the OPEC+ group to slash oil production, particularly focused on the related threat posed by Iran.

By Jonathan Hessen and Erin Viner

The US leader has called on his administration and Congress to explore ways to boost domestic energy production in a bid to reduce OPEC’s control over energy prices.

The Organization of Oil Exporting Countries (OPEC) was founded by Iran, Saudi Arabia, Iraq, Kuwait,  and Venezuela in 1960, and later expanded to include Algeria, Angola, Congo, Equatorial Guinea, Gabon, Libya, Nigeria, and the United Arab Emirates (UAE).

In 2016, OPEC formed a super cartel with additional oil exporting countries – led by Russia – in an initiative to set the global price of crude oil through agreed-upon quotas and voluntary supply cuts aimed at keeping production below demand levels on the world market. Azerbaijan, Bahrain, Brunei, Kazakhstan, Malaysia, Mexico, Oman, the Philippines, Sudan and South Sudan also belong to the group, which is known as OPEC+.

The cartel’s severe cut in oil production – deemed by Washington “shortsighted” – will likely drive energy prices to spike, heavily impacting the US and further worsening the current energy crisis in Europe.

“We have said, the President has said from the beginning of his administration that we need to, you know, redefine this relationship that we have with Saudi Arabia. This is something that he has said for some time,” said White House Press Secretary Karine Jean-Pierre, stressing that, due to Riyadh’s “action” and the “OPEC+ decision that they made” demonstrates “that we see that they’re aligning their energy policies with Russia.”

The White House Spokesperson added that, “You will hear from us when we lay out what actions we are going to take. We’re going to review them” as “this is something that we take very seriously.”

When asked at a press briefing how the US could fulfill President Biden’s pledge to recalibrate its relationship with Saudi Arabia without benefiting its regional adversary, Iran, US State Department Spokesman Ned Price responded, “Certainly, we won’t take our eye off the threat that Iran poses not only to the region but in some ways beyond. You have seen us, separate and apart from any single bilateral relationship we have with the region, respond and take action, in some cases multilaterally, in some cases unilaterally, against the malign actions and malign influence that Iran has perpetrated, that Iran has attempted to export throughout the region. We are not going to cast aside any of the important tools that we need to wield to ensure that Iran does not pose a threat to American people, to American interests, and to our broader interests in the region. That certainly won’t change.”

“There are security challenges, some of which emanate from Iran. Certainly, we won’t take our eye off the threat that Iran poses not only to the region, but in some ways beyond,” Price said.

US concerns have been heightened over a summit between Russian President Vladimir Putin and his UAE counterpart Sheikh Mohammed bin Zayed al-Nahyan in Saint Petersburg yesterday.

The move drew a sharp response from Biden that underscores the growing rift between the US and Saudi Arabia on energy policy.

Sheikh Mohammed issued a message on Twitter saying that his talks with Putin included discussion of “several issues of mutual concern, including the Ukraine crisis, and the importance of engaging in dialogue to reduce tensions and arrive at a diplomatic solution.”

The past Sunday, the Kremlin lauded OPEC+ for agreeing to reduce production that it claimed had successfully countered the “mayhem” sown by the White House in global energy markets.

Despite US criticism of the steep OPEC+ cuts, President Vladimir Putin commented that Russia is not working against anyone on energy markets and was seeking a balance between oil supply and demand.

“We are also actively working within the framework of OPEC+. I know your position, our actions, our decisions are not directed against anyone, we are not going to and do not do it in such a way as to create problems for anyone,” Putin told the UAE leader during their meeting, insisting that, “Our actions are aimed at creating stability in the global energy markets, so that both consumers of energy resources and those involved in production, suppliers to the global markets feel calm, stable and confident. So that the supply and demand would be balanced.”

Despite Saudi Arabia’s efforts to convince the West that it is not aligning itself with Russia, State Department Spokesperson Price emphasized, “Our North Star, our guiding principle, will be to see to it that we have a relationship that serves our interests. This is not a bilateral relationship that has always served our interests. Since we came into office, we have sought to recalibrate it, to make changes to the relationship. And we’ve spoken to some of those changes that – some of which we took in the earliest days and weeks of the administration – but we are going to continue to consult with stakeholders, to consult with Congress, to consult with partners around the world, about what more we can and should do to see to it that this relationship is optimized in terms of how it can serve our interests.”

Price further noted that, “Of course, we’re not a member of OPEC, but OPEC had an opportunity to take a step to see to it that supply better met demand. They chose not to do that. They chose to take a step that would not serve our interests, does not serve the longer-term interests of countries in the region, but it certainly serves the shorter-term interests of countries like Russia, a country that stands to gain, at least in the near term, from elevated oil prices.”

Allegations of the Saudi-led OPEC group’s alignment with Russia was dismissed by the Kingdom’s top diplomat last week – who claimed that the decision by the OPEC+ group genuinely seeks to stability the market.

“You know, our priority now is stabilizing the market. Now, we could be accused of wanting to influence market in a negative way. That’s everybody’s prerogative. You and others, will see how we conduct ourselves in the months to come,” stated Saudi Energy Minister Prince Abdulaziz bin Salman al-Saud. He added that, “The most pivotal and more important thing for all of us in this table, and others who have a huge amount of hydrocarbon resources is to make sure that we have a stable, sustainable, stable market that will not inhibit investment, that will not inhibit growth of demand. And we have to act in a way, in a responsible way to assure people that we are still remaining responsible producers, that the world can rely on us.”

 OPEC Secretary General Haitham Al Ghais also stressed that the production cuts “are not endangering the energy markets. We are providing security stability to the energy markets.” When asked by a reporter would carry a cost, the cartel chief remarked that, “Everything has a price. Energy security has a price, as well.”