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Foreign Policy

Setbacks in U.S.-Saudi Relations

Oct 31, 2022
  • He Wenping

    Research Fellow, West Asia and Africa Studies Institute of the China Academy of Social Sciences

OPEC, led by Saudi Arabia, together with the oil-producing alliance of non-OPEC producers known as OPEC+, announced a production cut, starting in November, of 2 million barrels per day, the largest since the outbreak of the COVID-19 pandemic. This prompted international oil prices to rise, leading to the largest single-week increase since mid-March this year. It left governments grumbling in the United States and Europe, which were already beset by high oil prices and inflation and facing electoral challenges. Most striking, the U.S.-Saudi relationship suffered a sharp setback.

First came a strong reaction from U.S. National Security Adviser Jake Sullivan, who said publicly that Saudi Arabia’s support for the oil production cut had raised tensions in an already stormy relationship. The U.S. will reassess its relationship with Saudi Arabia, and President Joseph Biden will not meet with Crown Prince Mohammed bin Salman during the G20 summit in November. Elsewhere, members of Congress introduced a bill to suspend U.S. arms sales to Saudi Arabia, and there are even proposals to cut off diplomatic relations.

President Joe Biden himself also issued a warning to Saudi Arabia that it must be prepared to bear the “consequences.”

In addition, national lawmakers in the U.S. have begun to explore the use of the No Oil Producing and Exporting Cartels (NOPEC) bill to file antitrust lawsuits against OPEC producers in an attempt to use the long arm of U.S. jurisdiction to control OPEC-related decisions.

OPEC’s decision to cut production angered the United States for three main reasons:

• The reduction amounts to support for Russia. It effectively diluting U.S. and European economic sanctions and brings more oil revenue to Russia.

• The reduction adversely affects the Democratic Party in the upcoming U.S. midterm elections. Rising oil prices and inflation directly affect the lives of the American people and are directly related to the choice of each voter.

Saudi officials have made a public statement that the Biden administration asked Saudi Arabia and other major oil-producing countries to postpone their plans to significantly reduce their crude oil production by one month, starting in November, to ease domestic inflationary pressure in the United States so that the Democrats could win the midterm elections. There is no doubt that the White House was deeply embarrassed and displeased that Saudi Arabia put the deal — which was under the table — onto the top of the table.

• The reduction dishonors the United States and is even a slap in the face to U.S. President Joe Biden. Biden personally visited Saudi Arabia in July, hoping that it and other Gulf countries would increase their oil production, which he claimed would strengthen the “strategic partnership” between the United States and Saudi Arabia and open a new chapter in relations.

But to Biden’s great disappointment three months later, OPEC decided to significantly reduce its oil production. Isn’t this an indirect announcement that Biden’s July trip to Saudi Arabia had come to nothing?

The second setback in relations involved strong Saudi countermeasures and de-Americanization initiatives. In dismissing the U.S. accusation that the oil production cut amounted to support for Russia, Saudi Arabia stated that this is a purely “economic act” to protect the interests of oil-producing countries and had nothing to do with the current Russia-Ukraine conflict. Seemingly to confirm this, Saudi Arabia immediately announced that it would provide $400 million in humanitarian aid to Ukraine, which also immediately won a thank you from Ukrainian President Volodymyr Zelensky to Saudi Arabia.

Moreover, to show that the decision to cut production was not a Saudi idea but a joint decision of the 23-member OPEC+ group, OPEC members have stepped forward in support of Saudi Arabia and have defended the decision to cut production as a collective economic decision.

But the Saudi backlash does not stop there, nor did it originate from there. In fact, since the Biden administration took office, neither of two major obstacles to the improvement of U.S.-Saudi relations — the murder of Saudi journalist Jamal Khashoggi and the Saudi war in Yemen — has been removed. Saudi Crown Prince Mohammed bin Salman, who was born in the late 1980s, has high self-esteem and diplomatic independence.

In fact, Saudi Arabia has started several de-Americanization initiatives since 2020. For example, it has sold at least $62.8 billion of its U.S. debt, or nearly 35 percent of its total debt to date. Compared with Saudi Arabia’s foreign exchange reserves of about $450 billion, it is equivalent to the sale of about 14 percent of Saudi dollar reserves.

In addition, Saudi diplomacy has begun to show a “look east” trend. After becoming a dialogue partner of the Shanghai Cooperation Organization in July 2021, it recently expressed its intention to join the BRICS mechanism. And, more important, as the leader of OPEC and one of the leading countries in the Middle East, Saudi Arabia has a certain driving effect not only in the international energy market but also in the diplomatic orientation of the region.

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