Crown Prince Mohammed bin Salman receives UK PM Boris Johnson at the
Royal Court at Al-Yamamah Palace, Riyadh, March 16 [photo credit: @spagov]
The Russian government, which draws 40
per cent of its revenues from oil and gas exports, reached out to
Qatar, the United Arab Emirates, and Saudi Arabia to discourage them
from confrontational behaviour in the energy market. President Vladimir
Putin sent a letter to
the emir of Qatar, Tamim bin Hamad Al Thani, ahead of the February 2022
meeting of the Gas Exporting Countries Forum. Qatar, the world’s
biggest supplier of liquefied natural gas (LNG), has declared its
willingness to contribute to European energy security in case of a
disruption of Russian supplies, while emphasising that it would not be
able to help unilaterally.
Qatar has little spare capacity on the spot market for LNG – which is
currently trading at sky-high prices – but European states are
considering whether to engage with the country’s Asian customers to
reroute large quantities of gas supplied under contract.
Saudi Crown Prince Muhammad bin Salman and his Emirati counterpart, Muhammad bin Zayed, both spoke to
Putin before reaffirming their commitment to a production schedule deal
signed in 2020 by Russia and members of the Organization of the
Petroleum Exporting Countries (OPEC) in the OPEC+ format. At that time,
Riyadh forced Moscow
to the negotiating table by flooding the oil market with supply to
collapse prices – and even by directly selling to Russia’s traditional
customers in eastern Europe. The deals Saudi Arabia signed this
year with Polish company Orlen and Danish firm Kalundborg Refinery
would now put Riyadh in an ever stronger position to access markets in
Poland, the Czech Republic, Lithuania, and Denmark.
Yet Riyadh now claims that it does not want to politicise oil and
upset the balance within OPEC+. It has rejected multiple calls to raise
oil output to drive down prices – which came in the form of a phone call
between US President Joe Biden and King Salman; a visit to Riyadh by
White House Coordinator for the Middle East and North Africa Brett
McGurk and the State Department’s energy envoy, Amos Hochstein; and a
phone call between French President Emmanuel Macron and the crown
prince. British Prime Minister Boris Johnson has also joined the
fray, travelling to both the UAE and Saudi Arabia in the hope that his
personal relationships with the country’s rulers will do the trick.
Despite Gulf monarchies’ hesitation to change course, they do not
regard Russia as a strategic partner. These states have four main
interests linked to Russia: cooperation on energy policy, access to
military technology, investment, and coordination on geopolitics. Russia
has reduced its agency in all these areas by launching an all-out war
on Ukraine. Moscow is an important interlocutor for Qatar in the Gas
Exporting Countries Forum and for Saudi Arabia in OPEC+, but it is also a
competitor. If, as is widely predicted, the green transition causes the
oil market to shrink in the years to come, Russia and Saudi Arabia are
set for a long-term battle over market shares.
Despite signing strategic agreements with
Saudi Arabia and the UAE, Russia is not in a position to replace the US
as a regional security guarantor or a strategic defence partner.
Russia’s endgame in Syria and Libya is in line with that of the UAE, but
their policies are opportunistic. While Russia may have recently tried
to use the Iran nuclear deal as leverage against
Western sanctions, it has long resisted Saudi attempts to contain Iran
geopolitically. Indeed, Gulf monarchies’ refusal to side with the US and
Europe against Russia is not about Russia. It is about navigating the
new multipolar world order, taking a transactional approach to
protecting national interests, and avoiding the costs of strategic
alignment.
Gulf states see the US as committed to retrenching from its
traditional role as the Middle East’s security guarantor – meaning they
believe Washington has less to offer and less to threaten than it once
did. In reality, they are likely to quickly see the limits of extreme
hedging.
Europeans – who have far less influence than
the US in the Gulf – can speed up this reckoning. They should deliver a
clear message to Gulf states that forging a strong energy partnership
with Europe now would not only be a short-term attempt to outfox Russia
but also an element of a decades-long strategy for the green transition –
one that would minimise the risks of political and economic
instability, especially in the Gulf. To deliver this message, European
Commission Executive Vice-President Frans Timmermans and Energy
Commissioner Kadri Simson should go ahead with a visit to Saudi Arabia
that was initially planned for the third week of March but could be
delayed due to Russia’s war on Ukraine.
Energy will feature prominently in the upcoming EU-GCC Joint Action
Programme, given that European countries see Gulf monarchies as key sources of
green energy and investment partners in this sector. European leaders
can still edit the document, which should be published soon, to expand
their engagement with Gulf states on energy issues. They should offer
Gulf states a more appealing compromise on carbon pricing and the
phase-out of hydrocarbons, as well as a stronger strategic commitment to
trade in green energy, electricity, and LNG. Through this kind of
clear-eyed consistency, Europe can encourage Gulf states to abandon
extreme hedging.