US President Donald Trump and Saudi Crown Prince Mohammad bin Salman, Reuters
Oil has been at the heart of the Saudi-American economic relationship for eight decades, but that fact is changing as black gold no longer occupies the center on which the economic partnership between the two countries evolves.
It is worth noting that the United States itself is importing less shale oil after worldwide production has significantly increased, possibly putting it on the track to surpass Saudi Arabia and Russia in terms of production for 2018.
Last year, US imports of Saudi crude oil fell more than usual due to Saudi Arabia's policy of rolling back production along with Russia and the rest of the Organization of the Petroleum Exporting Countries (OPEC).
The oil-cut agreement between OPEC and non-OPEC producers forced the Kingdom to reduce its exports to the US in the second half of 2017.
US imports from Saudi Arabia show that since July 2017, the kingdom has not exported over 1 million barrels per day to the United States. It fell to 795,000 bpd, from a previous 1.015 million bpd in June, according to the US Energy Information Administration.
More so, US imports of Saudi oil fell to their lowest level since 1988 in October, reaching 563,000 bpd, almost half of what the US imported in the same month in 2016.
But the Kingdom can go back to boosting production to one million bpd—nevertheless, it is not likely for production to exceed a million bpd by far. It is difficult to assume that the Kingdom will return to exporting above 1.5 million bpd.
Saudi Arabia continues to share multiple energy partnerships and other oil sector interests with the US, as both countries are interested in stabilizing the oil market.
Saudi Aramco has the largest refinery in the US, the Motiva refinery in Port Arthur, which has a refining capacity of over 600,000 bpd.
Many Aramco officials, on different occasions, expressed the company’s desire to own new assets in the US. It is also looking for a new Liquefied natural gas (LNG) deal and has already spoken with some US companies, including Tellurian Inc, The Wall Street Journal reported months ago.
The US administration, led by President Donald Trump, combines the same approach with the Saudi government.
US Energy Secretary Rick Perry said in a Huston speech that the US will not take a hostile attitude toward fossil fuels, especially since many developing countries in the world need cheap and clean energy.
An important aspect of Saudi-US energy cooperation has recently emerged in terms of nuclear energy. The kingdom seeks to build its very own nuclear reactors for peaceful means of producing clean energy.
Competition seems to be building up on Saudi nuclear reactors, with the US showing strong interest following Russia's announcement on making a move towards building reactors to produce electricity in the kingdom.
Bloomberg reported that the US administration was considering allowing Saudi Arabia to enrich uranium in the kingdom for peaceful purposes, which would give preference to US companies wanting to build reactors in the kingdom, such as Westinghouse Electric Co., Exelon Corp. and others.
In Riyadh, Russian Energy Minister Alexander Novak said in a joint press conference with his Saudi counterpart Energy Minister Khalid al-Falih last month that Russia's Rosatom had asked the Saudi government to build nuclear reactors in the kingdom.
The kingdom plans to build 16 reactors for peaceful uses over the next 20 to 25 years, with investments amounting to $80 billion, according to the World Nuclear Association.
Saudi Arabia, which seeks to reduce domestic oil consumption, is considering building a nuclear power generation capacity of 17.6 gigawatts by 2032 and has sent a request for information from global suppliers to build two reactors.
Saudi Arabia has also attracted considerable attention from China and France, along with the US and Russia, to build nuclear reactors.
Saudi Arabia launched its Vision 2030 in 2016. (AP)
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Arab Gulf in 25 Years: Prosperity in a Region on Fire
Saudi Arabia launched its Vision 2030 in 2016. (AP)
Dr. Ibrahim Al-Othaimin*
I like to refer to Henry Kissinger in summing up the reality experienced in the region over the past quarter century. In his book, “World Order: Reflections on the Character of Nations and the Course of History”, the former US secretary of state said “the Middle East is caught in a confrontation akin to—but broader than—Europe’s pre-Westphalian wars of religion. Domestic and international conflicts reinforce each other. Political, sectarian, tribal, territorial, ideological, and traditional national-interest disputes merge.”
The wars, he added, were caused by the collapse of the state and their transformation into fertile ground for terrorism and weapons smuggling. The collapse will subsequently lead to the breakup of the regional and world orders.
The Arab region witnessed unprecedented developments in the past 25 years that have altered its features and impacted the structure of its regional order. The Arab Gulf countries were at the heart of these developments. Despite the regional and international threats, they managed to maintain their internal stability and consolidate their pivotal role in achieving regional balance, underscoring their position as the cornerstone of security and stability in the region.
The September 11, 2001, attacks changed the shape of the world. (Reuters file)
First wars of the 21st Century
The September 11, 2001, attacks marked the beginning of the first wars of the 21st Century that would go on to change global security equations. They would also lead to massive pressure on the region by the terrorist al-Qaeda organization. The developments were a real turning point in global counter-terrorism efforts.
Saudi Arabia and the Gulf were victims of a series of terrorist attacks in the past decades that targeted their security and stability. The worst of the attacks targeted a refinery in the city of Yanbu. It was carried out by Mustafa al-Ansari, an al-Qaeda member who had taken part in fighting in Afghanistan and Somalia. Another attack targeted Halliburton offices in the city of Khobar.
The Gulf countries responded to these challenges by taking firm counter-terrorism measures and launching efforts to dry their sources of funding. In 2002, the Gulf Cooperation Council countries approved a joint security strategy to combat terrorism.
In 2004, Gulf countries signed a counter-terrorism agreement during a meeting of interior ministers in Kuwait. The agreements established a legal framework for GCC efforts to bolster coordination between their members. In 2006, they set up a permanent security committee tasked with combating terror. The committee meets regularly to address terrorism-related issues and to bolster joint security cooperation.
The 2003 US invasion of Iraq was one the landmark moments in the war on terror. It forever changed the shape of the region, paving the way for a new chapter of unrest. The toppling of Saddam Hussein’s regime led to security vacuum that gave way for sectarian divisions and increased Iran’s influence, creating instability in the region.
Even though the Gulf countries opposed the invasion and stressed the need to respect international laws, they found themselves having to confront its fallout. On the political level, they expressed their concern over Iran’s growing influences and intensified their efforts to back Iraq’s unity, stability, sovereignty and independence. They supported the political process that was led by the UN, including holding legislative elections and the ratification of a new constitution.
On the security level, the Gulf countries sought to bolster their defense capabilities, intensify intelligence cooperation and boost security partnerships with the US to counter Iran's influence.
A US soldier covers a Saddam Hussein statue with an American flag in Baghdad on April 5, 2003. (AFP)
Major collapses
The region was soon swept by the 2011 so-called “Arab Spring” protests. The Gulf was again put to the test of maintaining its internal security and stability amid the major collapses of regimes and rulers across the region, starting with Tunisia, then Egypt, Libya, Syria and Yemen.
These developments led to the collapse of political systems and the fragmentation of the countries’ social and political structures. Chaos reigned, leading to unrest and protests, which were fertile ground for the emergence of terrorist groups and foreign meddling that seek their interests at the expense of regional stability.
The Gulf countries feared that these changes would lead to the spread of so-called political Islamist ideology in the Arab world. They approached the “Arab Spring” from a deep strategic view and with total awareness of the challenges at hand. This allowed them to take calculated steps that preserved their internal stability and regional roles. The countries also worked on consolidating internal unity and listened to the demands of the people to ensure that stability is maintained.
On the regional level, the Gulf contained the impact of the crises through supporting allied countries that were affected by the unrest. They also intervened directly in some countries, such as Yemen and Bahrain, to preserve stability and avert the spread of chaos.
After more than a decade since the “Arab Spring” developments, their impact is still very much felt to this day in several countries in the region. Throughout, the Gulf countries managed to maintain their stability and present themselves as a regional force that can help in confronting chaos and unrest.
The crises in Gaza and Lebanon have topped the concerns of Gulf countries. (SPA)
COVID-19
No sooner had the region caught its breath after the unrest than it was confronted by the COVID-19 pandemic in 2020. The world was faced with an unprecedented threat that helped reshape health and economic priorities and left a lasting impact on various levels.
The Gulf countries, especially Saudi Arabia, handled the crisis with extraordinary skill. From the very first moment the virus emerged, the Kingdom took firm measures and offered healthcare to everyone without exception. It provided free treatment, expanded its healthcare sector and rapidly launched vaccination campaigns that were commended by international organizations.
Despite the pandemic’s impact on the global economy and oil prices, the Gulf countries’ preemptive long-term plans and strategies, which called for easing reliance on oil, such as Saudi Arabia’s Vision 2030, allowed them to weather the storm. The Gulf countries showed vigilant leadership and an exceptional ability to adapt during the pandemic, allowing them to protect their people and preserve their economic and social stability.
Prosperity amid regional tumult
The region is now confronted with a new wave of escalation, especially amid the war on Gaza and the possibility that the conflict may spread in the Middle East. It also has to contend with the fallout of the collapse of Bashar al-Assad's regime in Syria.
Amid these changes, the Gulf countries have again proven their ability to adapt by presenting effective diplomatic initiatives and deepening international coordination with the aim of consolidating stability in the region.
The Palestinian-Israeli conflict and the war on Gaza remain a top priority. The Gulf countries have repeatedly called for ending the conflict. They have backed international and regional efforts to reach a peaceful resolution based on the 2002 Arab Peace Initiative and implementing the two-state solution.
In Lebanon, as tensions rise with Hezbollah, the Gulf countries have continued to support efforts that would bolster Lebanon’s sovereignty and stability through international coordination aimed at the implementation of UN Security Council resolution 1701.
The Gulf region is also preparing to deal with post-Assad Syria, hoping to help in the country’s reconstruction to establish it as a stable state that shuns Iranian meddling. The goal demands critical coordination with regional and international partners to ensure that stability is restored to Damascus and the entire region.
*Dr. Al-Othaimin is a researcher in foreign relations.
