Will Saudi Arabia abandon the United States for Russia and China? – .

Will Saudi Arabia abandon the United States for Russia and China? – .

The meeting last week between Russian Deputy Prime Minister Alexander Novak and Saudi Energy Minister Prince Abdulaziz bin Salman to discuss expanding and deepening cooperation between the two countries in the energy sector and others, marks a key point in Moscow’s ongoing attempts to decisively separate the Kingdom from its longtime ally, the United States. This strategy aligns with the ultimate intention of Russia and China to neutralize American influence across the Middle East, which, in turn, is a central part of Russia’s plans to increase its influence over the Middle East. Europe, the end of the game being to split the NATO security alliance. . It is also in line with China’s plans to roll out its multigenerational power outlet project – “One Belt, One Road” – that would allow it to replace the United States as the world’s number one superpower. The genesis of this seismic shift in geopolitical alliances was the failure of the oil price war in Saudi Arabia in 2014-2016, which was launched with the Kingdom’s specific intention to destroy – or at least seriously deactivate for as many years as possible – the then United States. – nascent shale oil sector. It was evident to the Saudis at that time that the uncontrolled build-up of lower fixed costs, lower lifting costs, American shale oil in ever-increasing volumes would ultimately mean the extreme decrease in power for Arabia. Arabia in the world and as a key player in the Middle East, given that its only real power base is its oil supply. In short, the Saudis really had no choice but to try and take on the U.S. shale industry, and they did, but they lost and paid a terrible price, with it all – y including actual figures relating to Saudi Arabia’s crude oil reserves, spares capacity, and production – analyzed in full in my previous book in world oil markets.

The immediate consequences of the 2014-2016 oil price war were not only that Saudi Arabia had devastated its own economy and those of its OPEC brethren for years to come, but, more importantly, d ‘from a geopolitical point of view, that it had lost its credibility as de facto leader of OPEC and that OPEC had lost its credibility as an indomitable force in world oil markets. This meant that OPEC’s statements about future levels of oil supply and demand – and therefore prices – had lost much of their ability to move markets in themselves, and that their joint production agreements were less effective. At the end of 2016, therefore, and fully aware of the enormous economic and geopolitical possibilities open to it by becoming a key player in the supply / demand / price matrix for crude oil, Russia agreed to support the agreement to reduce the oil price. OPEC production in it was henceforth to be called “OPEC +”, albeit in its unique and selfish and ruthless way.

Since then, Russia has used its position as a real key player in the OPEC + alliance to do what it does best: create pockets of chaos into which it can project its own solutions and thus expand its power. In the case of the Middle East, this cornerstone strategy has been used in virtually all of the countries of the Shia crescent – although more recently in Iran, Iraq and Syria – but it has also systematically trimmed the foundation stones of the long tradition. US-Saudi Alliance. As I also pointed out in my last book, the basis for this relationship was formulated during a meeting on February 14, 1945 between then-US President Franklin D. Roosevelt and the Saudi King of the era, Abdulaziz. The historic deal reached was: The United States would receive all the oil supplies it needed as long as Saudi Arabia had oil in place, in return for which the United States would guarantee security at the same time. the ruling House of Saud and, by extension, that of the Saudis. Saudi Arabia. By the end of the 2014-2016 oil price war, however, the deal had been modified slightly to reflect the growing impatience of the United States over Saudi attempts to hamper the development of its shale oil sector. The new agreement was: and that Saudi Arabia does not attempt to interfere with the growth and prosperity of the US shale oil sector.

Related: Saudi Arabia Seeks To Attract Tourists With ‘Epic’ Offshore Platform Thrills

Russia saw in this additional codicil a huge opportunity to decisively separate Saudi Arabia from the United States and since then has laid the foundation for the relationship to achieve this, most recently with help from China as well. In a manual strategy by which intelligence agencies recruit and develop new sources, an agreement was discussed between Saudi Arabia and Russia in the third week of June 2020, which laid the groundwork for cooperation much closer in the future. In theory, this only looked like a marginal extension of the OPEC + agreements that had been in place between Russia and Saudi Arabia since 2016, but it also included additions based on discussions during King Salman’s visits to Moscow in 2017 and MbS in 2019. This new mutual understanding was clearly signaled when Russian President Vladimir Putin invited the King of Saudi Arabia, Salman bin Abdulaziz al-Saud, to Russia in October 2017, the first visit to Moscow performed by a sitting Saudi monarch.

At that meeting, and the many corollary meetings between officials from the two countries in which real business is being done, several tangible agreements were reached in a wide range of areas, not just in the oil sector. Among the roughly $ 3 billion in deals announced at that time was a Saudi investment of at least $ 150 million in Russian firm Eurasia Drilling Company and, on the other hand, a deal of 1.1 billion dollars for Russian petrochemical company Sibur to build a plant in Saudi Arabia. Russian Energy Minister Alexander Novak also reported at the time that Russian gas producer Novatek was in talks for Saudi investors to participate in its Arctic LNG2 project, a follow-up to its $ 27 billion plant. in the Yamal Peninsula. At the same time, it was agreed that Saudi Arabia’s sovereign wealth fund, the Public Investment Fund, will establish a US $ 1 billion fund alongside the Russian sovereign wealth fund, the Russian Direct Investment Fund, which would invest in Russian technology companies. Similarly, Russian state-owned hydrocarbons companies Rosneft and Gazprom have entered into talks with their Saudi counterpart Aramco to conduct coordinated oil and gas trading operations – drawing on expertise and contacts. not crossed from Lukoil’s Litasco trading operation when needed – and the creation of a common research and technology center.

More seriously still from the American point of view, two other key points were discussed – and agreed in principle – between Russia and Saudi Arabia during these meetings. First, the Saudis have responded to their demand for the impeachment of Syrian President Bashar al-Assad, and second, and perhaps most extraordinary, Saudi Arabia has signed a memorandum of understanding for the purchase from Russia of its S-400 air defense system. These last two points can be seen as the first clear evidence of the deal drift that Russia sought to exploit since it began to cooperate with the OPEC + agreements in 2016 and, in doing so, decisively push away Saudi Arabia from its long-standing relationship. with the United States and replacing it with one with Russia (and, by extension, China).

By the time MbS’s visit to Moscow in 2019 took place, Russia was in an even stronger position. First, Saudi Arabia’s finances continued to deteriorate significantly, as its break-even price of US $ 84 per barrel of Brent was still higher than the spot price of oil. In addition, any attempt to raise the price of oil was effectively interrupted by the Tweet from US President Donald Trump which read: “He [Saudi King Salman] would not hold office for two weeks without the support of the US military. Second, Saudi Arabia’s security vulnerability was highlighted by the rocket attacks on September 14, 2019 by the Iranian-backed Houthis against two of the Kingdom’s main oil facilities – the massive oil rig. Abqaiq oil processing and Khurais oil field. Since that time, of course, Saudi Arabia’s relations with the United States have deteriorated when the Kingdom violated the additional codicil banning further action against the U.S. shale oil industry with its oil price war of 2020, and, as it happened, it therefore moved closer to Russia and continues in this eastward drift.

By Simon Watkins for Oil chauffage

More most popular reads on Oil Octobers:


Please enter your comment!
Please enter your name here