The White House has gone too far in its reaction to the OPEC+ decision to cut oil production by two million barrels a day. The decision was framed as a Saudi attack on the US aimed at influencing the midterm elections by raising the price American voters pay for oil and fueling resentment at the Democrats. Some have even leaped to the conclusion that Riyadh has chosen to ally with Moscow in the ongoing battle between the latter and Western capitals being waged against the backdrop of the conflict between Russia and Ukraine.
Over the past few days, the major liberal newspapers have been brimming with commentary and statements from members of Congress suggesting marvelously creative punitive measures against Saudi Arabia, giving one the impression that this was a sovereign decision Saudi Arabia had taken alone and that the US is the sole target of this decision globally.
Since oil is a universally strategic commodity, an obvious question comes to mind: why did neither India nor China consider the decision to cut production, which aims to stop prices from dropping further, to have been taken to undermine their interests? Indeed, these two countries are facing far more grave economic challenges than the US and will thus take a bigger hit from the rise in oil prices. Is it a secret to anyone that India and China are competing over every drop of oil they can obtain at a discount, especially Iranian and Russian oil, as they seek to cut costs and reduce the pressure their economies are under? Why has Germany, the European country most dependent on Russian energy, decided to seek agreements and develop solutions with the Gulf states instead of populist rhetorical escalation against the Kingdom?
Moreover, what harms the global economy more, Iran’s direct role in prolonging the Russian-Ukrainian conflict (or at least its criminal intention to do so, as demonstrated by its decision to send Moscow drones to bomb Ukrainian cities with), or the decision of OPEC+- the hostility to which wise, calm figures within the administration, such as Amos Hochstein, have played down? Indeed, he refrained from hastily and unfoundedly calling it an act of aggression, only saying that, in his opinion, it was a wrong decision.
These questions do not need answers; they answered themselves as soon as the fog of populist statements from Washington subsided.
The superficial and hasty conclusion that the Kingdom of Saudi Arabia has chosen to align itself with Russia in the latter’s conflict with Ukraine is nothing short of detached from reality. Does it imply that the United Arab Emirates, the only Arab state currently in the Security Council, thus representing shared Arab interests within it, went against Saudi Arabia by voting to condemn Russia’s annexation of four Ukrainian regions?
Riyadh has not issued an opposing stance to that taken by the UAE at the Security Council, meaning that the decision of the UAE does not express the position of Abu Dhabi alone but reflects a solid joint understanding among the Arabs that this position in their interests, even if the proposed resolution did not pass because of a Russian veto. How, then, could Saudi Arabia be allied with Russia and supportive of its war when it comes to oil but opposed to it regarding the outcome of the war itself?
After calming down, Washington needs to ask itself, why have we seen prices drop the way they have since August 30 despite the fact that Saudi Arabia had not taken any serious technical or political measures to precipitate this decline?
The fact of the matter is that this drop in prices is a reflection of the dynamics of the oil markets, which are affected by an array of shifting, constantly effervescing factors. These factors include apprehensions created by the war between Russia and Ukraine and the implications of the coronavirus pandemic that we continue to feel, especially in China, where mass lockdowns are still being imposed, reducing its demand for oil. Added to them are the facts that central banks around the world are raising interest rates and that recession is on the horizon in Europe and across the world.
Why are scientific and technical reasons accepted in explaining the decline of the price of oil since August 30 but not in explaining the decision taken by OPEC+?
Some of the reactions to the OPEC+ decision have gone as far as suggesting support for a longstanding legislative proposal known as “NOPEC,” which stipulates holding the OPEC+ cartel legally responsible in the event that it is proven that its member states had colluded to manipulate prices!
Floating such proposals is enough to toxify the oil market, stir panic, and raise prices far higher than any OPEC+ decision can.
To reiterate, oil is a strategic commodity, and decisions regarding this commodity could have ramifications that go beyond the economy, affecting politics and even questions tied to national security.
It seems that the truth of the matter, which has been articulated by American officials and commentators, is that it is Washington that is demanding the politicization of oil prices. The Biden administration wants OPEC+ to take decisions aimed at punishing Russia by reducing the profits it makes from the sale of oil and uses to fund its war on Ukraine. That is, it demands that countries like Saudi Arabia, the United Arab Emirates, and others pay the bill for punishing Vladimir Putin’s regime without the US accounting for the interests and security concerns of these countries regarding the matters that concern them.
Though it has political ramifications, the decision taken by OPEC+ is technical. As for what Washington wants, it is the decision on the matter to be purely political and aimed at weaponizing energy to confront the weaponization against Europe by Putin’s regime through halting gas exports. Let us assume that this was possible without implying significant economic, political, and security ramifications on the countries concerned with the decision; why would they do Washington this service?
Did the US administration act in accordance with the interests of Saudi Arabia regarding the question of whether to designate the Houthi militia as a terrorist organization? Have the concerns of Saudi Arabia and its Arab allies regarding the nuclear deal with Iran, which the Biden administration still seeks to conclude, been resolved? Has the US administration u-turned on its negative position regarding arms deals?
