AS THOUGH the decision by Saudi Arabia’s Crown Prince Muhammad bin Salman on June 4 to cut oil production to help lift prices was not enough to demonstrate that he was thumbing his nose at US President Joe Biden.
Then came the announcement, on June 6, of a merger between LIV Golf, launched by Saudi Arabia in October 2021 by its US$620 billion Public Investment Fund (PIF), and PGA Tour and Europe’s DP World Tour. The PGA had earlier accused the LIV of trying to “buy” the game of golf, and after a series of law-suits and counter-suits by both sides, they decided to settle their dispute and merge, with the PIF making huge capital infusion into the new entity.
Which puts MBS – who, to recall, had been bashed as a leader of a “pariah” nation by President Biden after the murder of Washington Post columnist Jamal Khashoggi in 2018 – at the top of the world; a big winner whether it comes to the game of golf or to the global energy markets.Indeed, the Saudis’ recent moves to manipulate oil prices amounted to major geo-economic and geo-strategic blows to the Biden administration.
Hence during the OPEC+ meeting in Vienna on June 4, Saudi Arabia announced that it would cut oil production again, by 1 million barrels a day to 9 million barrels a day, from July 1.In that context, the Saudis struck with OPEC+ members collectively to take 4.6 million barrels a day off the market at the same time, which is a shortfall of 4.6 per cent of current world production, that stands at about 100 million barrels a day. The Saudi oil minister described the step as a “sweet lollipop” for oil prices.But the impact of the move went beyond the oil markets. The Biden administration wanted Saudi Arabia, the world’s swing oil exporter, to expand production and flood the markets, sending prices down, which could devastate the Russian economy and hurt President Vladimir Putin at a critical juncture in its war with Ukraine.
Instead, President Putin would now feel less constrained in continuing to fight Ukraine, while at the same time the efforts by the US-led Western alliance to economically isolate Russia are being damaged.
You could also add to the list under the rubric “MBS’ sweet revenge against President Biden” the following: Iran, Washington’s long-time Middle Eastern foe , has just re-reopened its embassy in Riyadh, following the successful efforts by China, the US’s main geo-strategic adversary, to mediate an agreement between the Saudis and Tehran. The move was seen as part of a Chinese challenge to America’s hegemonic position in the Middle East.
Which begs the question – Is MBS spending much of his time searching for ways to make President Biden, who once upon a time vowed to isolate and punish Saudi Arabia for its human rights violations, really, really mad?
In a way, irritating Biden may just be the added benefit of what MBS regards as the pursuit of legitimate Saudi economic and strategic interests, and not as part of any anti-American policy.
Saudi Arabia urgently needs cash – a lot of cash to transform its economy and society in preparation for what many predict would be, for all practical purposes, the end of oil some 15 to 20 years from now.Hence maintaining high global oil prices is clearly in Saudi interests but runs contrary to the US’s desire for low oil prices. That would hurt Russia and help the American consumer benefit from lower energy prices, which in political terms is also in President Biden’s interests on the eve of the 2024 presidential election.
As MBS sees it, President Biden’s subsidies for green energy and electric cars is part of an effort to reduce America’s dependence on fossil fuels, which would inevitably lead to falling energy prices. The Saudis have to prepare for that eventuality by benefiting as long as they can from the current energy bonanza.Clearly, MBS isn’t necessarily operating here based on pro-Russia or anti-Ukraine sentiments. In fact, there were signs that Russia could be undermining the Saudi attempt to support a higher price for petroleum by producing more than its OPEC+ quota and pumping more cheap oil into the market, which in turn has angered Riyadh. From that perspective, Saudi and Russian interests aren’t aligned.
In fact, the Saudis, like another US Middle Eastern ally, Israel, has refrained from taking a clear position in the Russia-Ukraine conflict and have expressed a willingness to try to mediate between the two sides.
And Saudi Arabia may be in a position to play that role in the future. Recognising the Saudis’ rising diplomatic status, Ukrainian President Volodymyr Zelensky asked to attend the recent Arab League Summit in Saudi Arabia, while Saudi foreign minister Prince Faisal bin Farhan was in February 2023 the first Arab diplomat to visit Kyiv since the war began.
Nor is the role that China played in mediating the recent deal between Riyadh and Tehran a sign that the Saudis are now abandoning their military alliance with Washington and “tilting” in the direction of China.In fact, the decision to move towards détente with the Iranians reflected Saudi recognition that, after years of trying to persuade Washington to adopt a more assertive posture vis-à-vis Iran as part of an effort to prevent it from going nuclear, the Americans weren’t ready to go to war with Iran in order to save Saudi Arabia.
MBS concluded that if the Americans would not do the job for him, the most realistic way of trying to neutralise the immediate and mid-term threat from Iran is by improving its relationship with Teheran.The agreement with Iran also benefited the Saudis by helping to lay the conditions for the end of its long and costly intervention in Yemen’s bloody civil war, and strengthening ties with China, which has become Saudi Arabia’s largest trading partner.At the same time, MBS has also been taking steps to enhance the Saudi role as the leader of the Sunni-Arab bloc by welcoming Syria back into the Arab fold and by resuming relations with Qatar.
But then MBS, the ultimate Machiavellian Middle Eastern politician, has proved that when it comes to foreign policy he is able to dance in several weddings. Hence the visit to Saudi Arabia by Venezuelan President Nicolas Maduro last week was aimed at signalling to the Americans that they should not try to use the possibility of improving US ties with Caracas as a leverage against Riyadh.
And while MBS is improving Saudi relations with Iran, he also continues to maintain close ties with Iran’s adversary, Israel. He has provided support for the so-called Abraham Accords, which led to the normalisation of Israel’s relationship with four Arab countries, including two oil-producing Arab neighbours of Saudi Arabia. And he is sending signals that he may take the same route towards normalising relations with Israel under certain conditions.
In fact, MBS recognises that the detente with the Iranians could end any day, especially if the Iranians continue to seek nuclear military capability and to support their Shiite proxies in the region. Under these conditions, the connection with the Jewish State could help the Saudis to stand up to the Iranians.
And he also knows that when push comes to shove, if a war with Iran breaks out, the Chinese aren’t going to come to his aid, and that ultimately, the relationship with Washington remains the kingdom’s most effective national security insurance policy.