Saudi Arabia and Oil: Between the United States and Russia

Saudi frustration with US foreign policy

Saudi Arabia has been assertive in its oil production levels because it does not want to sacrifice future prosperity, Stephen Kalin explained. This assertiveness is largely in response to the United States’ wavering commitment to the region. “The Saudis, particularly [two years] into the Biden administration, feel that every 12-18 months they have to face a reassessment. They have started to turn that language around and say - maybe we should be considering a reassessment of our own.”

Bessma Momani affirmed Kalin’s statements, adding that, as the world’s top seller of oil, the US feels as though it is a “hegemonic power,” but “the Saudis know they are the number one buyer. This is a buyer’s market too - why do we need to sacrifice our own national economic development plans when we pay hard cash for all this weaponry?”

Saudi policy is also shaped by renewed nationalism and ambition to take greater control over economic development. As Momani states, “They are not going to be at the beck and call of the United States…  they have a population hungry for job opportunities. There is simply too much demand for the capital that would come from the export to cut it.”

According to David Ottaway, the change in presidential leadership in America further complicates US-Saudi relations. “President Trump twice tried to get the Saudis to either increase or decrease their oil production.” However, Momani contended that speculations over emphasized Saudi preference for a republican administration over democratic one. “That’s an American exceptionalist argument. From your perspective, it looks as though everything is decided in Riyadh through the prism of the midterm elections, but it’s just simply not,” adding, “there’s enough going on in the global economy in Saudi Arabia that determine their actions.”

Kalin explained that because the oil market is so interconnected, the price of Saudi oil still has an impact on the price of gas, despite the US’ waning dependence on oil exports from the Gulf country. This creates misunderstanding and leaves each side “divorced from economic reality,” according to Kalin.

Russia-Saudi cooperation and reactions from the Arab world

Guy Laron argued that the cooperation between Saudi Arabia and Russia is a “limited partnership, not an alliance.” However, the partnership is still surprising due to the historical presence of rivalry between the two countries. “The more Russia becomes isolated in the world arena, the more it is sanctioned, it finds that it needs new alliances,” he offered. “Right now, their interests align, so they cooperate. But if the terms and conditions of the oil market change, we can see this partnership unravel fairly quickly.” Momani added that the Russia-Saudi relationship is a “functional, good relationship,” and that Russia played a big part in creating a successful OPEC model.

Other countries in the MENA region are connected to Russia, with the UAE acting as a destination for Russian oligarchs. Despite the effects of the Russia-Ukraine war on the global food market, Momani argued, “They feel that Putin is going to live up to what he said he’s going to do. There is this unfortunate respect for Putin in that way. I hate to say it, but they at least feel that you’re getting a consistent perspective.” They also know the war will eventually end, and thus they want to maintain strong relations with Putin.

Prospects for the future

Kalin anticipated December 5 will see a “confluence of events with unexpected impact” when EU sanctions are implemented, in addition to the OPEC meeting on December 4 and the prospective visits between China and Saudi Arabia throughout the month.

The shift in US-Saudi relations reflects changing foreign alliances. As Kalin stated, “We are seeing more communication, alignment, and engagement between countries that are in the G20…and they’re increasingly confident and happy to work with each other, and not so happy with the global order that’s been in place for the past two decades.”

Laron and Momani both predicted that Russia will continue to bypass sanctions by having oil customers in Saudi Arabia, India, China, and Turkey. “I doubt that, in terms of the tense relationship with Washington, Saudi Arabia and Russia would announce it formally. It would work much better if it would remain a clandestine arrangement between them,” Laron argued.

The panelists ultimately agreed that we must wait to see the impacts of the OPEC and EU changes when they go into effect in December.