Saudi-Russian Collusion in Broad Daylight Sends a Clear Message to Biden

The Saudis are cynical, intent on raising the price of oil and increasing their revenue. The Russians are all about creating discord between the United States and European Union. Together, they present a new kind of challenge for Washington

By Alon Pinkas, HAARETZ

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Now comes OPEC+, an alliance of the 23-member OPEC members and independent oil producers, most notably Russia – an alliance against American interests. It decides to slash oil output by 2 million barrels a day, estimated at 2 percent of daily global consumption. OPEC accounts for around 82 percent of global oil reserves and 40 percent of production, excluding Russia and the United States, the largest producer and consumer.

Without getting too deep into energy geopolitics, the real cut will be around 950,000 barrels, since many OPEC members currently produce less than their quota targets. But that’s not the point. The actual Saudi-Russian – and yes, Emirati – decision is.

There are two very irreconcilable ways of looking at the decision. One, it’s a purely business, stay-ahead-of-the-curve decision motivated by an impending global recession. Or, two, it’s a blatantly anti-American move resulting from Saudi-Russian collusion. While the first perspective might explain the Saudis’ motives and the second is consistent with Russia’s interests, the two aren’t really equally viable. As American foreign-policy orthodoxy still contends, Saudi Arabia is an ally.

The OPEC+ members met physically in Vienna, as opposed to the video conference that was originally scheduled. Why the urgency to meet? Why the rush to cut 2 million barrels so quickly?

In its history, OPEC never slashed output on this scale so swiftly. Oil demand hasn’t collapsed, inventories aren’t at full capacity.

If oil climbs to $100 a barrel (it was $89 as I wrote this), the number will still be lower than the $130 in June before Biden’s ill-conceived trip to Jeddah. But the U.S. trend of gradually decreasing prices at the pump might be reversed a month ahead of the midterm elections. While the average across the United States is $3.89 per gallon (roughly 3.8 liters), on the West Coast it’s above $6 due to refinery maintenance and a lack of pipelines delivering oil to California.

In its statement, OPEC+ cited the “uncertainty that surrounds the global economic and oil market outlooks.” Informally, it referred to Goldman Sachs’ revising down of its 2023 oil price forecast (what these forecasts are worth is another story) from $125 to $108 a barrel. That, OPEC+ argues, justifies the preemptive move.

It doesn’t. This is extremely rancid geopolitics on the Saudis’ and Russians’ part. The former are cynical, intent on raising the price of oil and increasing revenue. They’re also a political ingrate in their relationship with the United States. With the Russians, it’s all about creating discord between the United States and European Union in the hope that the EU will pressure Ukraine into accepting annexations by Russia and achieve a cease-fire.

The United States and the EU must now realize a strategic fact of life: They have no ally in OPEC. Historically, at times of crisis, the West had one dependable ally. In the 1973 oil shock and embargo, Iran was the partner. In 1979, during the Islamic Revolution in Iran and again in 1990, after Saddam Hussein’s invasion of Kuwait, Saudi Arabia was the go-to U.S. ally.

Not anymore. This should be the overriding lesson for the United States and its allies: The Gulf isn’t a reliable, trustworthy ally. Stop pretending otherwise and stop replicating ’90s cliches about “our Saudi ally.”

In Washington, beyond the initial convoluted and bland responses (“disappointment” was one of them) the decision was interpreted as an affront against Biden and the United States. The Riyadh-Moscow axis has become a permanent feature of OPEC+ policy-making, and this is increasingly a zero-sum game. The more the axis is active and coordinated, the less reliable Saudi Arabia is to the United States. The idea to designate the OPEC+ move as “an act of hostility” with ensuing legislation will very likely gain bilateral traction in Congress.

“I thought the whole point of selling arms to the Gulf States despite their human rights abuses, nonsensical Yemen War, working against US interests in Libya, Sudan etc, was that when an international crisis came, the Gulf could choose America over Russia/China,” tweeted Connecticut Democrat Chris Murphy of the Senate Foreign Relations Committee.

Biden “should just start withdrawing stuff,” Rep. Tom Malinowski, a Democrat from New Jersey, told The New York Times, referring to the U.S. military presence in Saudi Arabia. “That would get their attention. Action for action. Call their bluff.”

If Biden wants to finally reassess the U.S.-Saudi relationship, he has a multitude of tools in his box. But he’ll have to consider that this would create a lucrative and dangerous opening for China.

On Thursday, Biden warned of a possible nuclear “Armageddon” resulting from Putin’s threats. Perhaps. Of no less significance is a new geopolitical map of strange partners: China, Russia, Saudi Arabia and Iran. The Saudis aren’t fully there yet, but they’re behaving as if they wouldn’t mind.

The geopolitical realities notwithstanding, there’s another dimension of energy security that the West will have to implement in the near future. Combined with energy alternatives, lower dependence on fossil fuels, streamlined inventories and gas storage, there will have to be a political way to counter OPEC’s cartel.

Earlier in the year, Italian Prime Minister Mario Draghi devised a plan to contain the oil price hike. Draghi, a former European Central Bank president, floated with Biden the idea of creating a cartel of oil consumers and increasing collective-bargaining power, similar to how OPEC agrees on annual production quotas. The idea is consistent with legislation in the U.S. Congress. While this isn’t yet implementable, Riyadh and Moscow may have accelerated the process.

Naturally, people will be looking at gasoline prices and whether they affect the midterms in November, and how they’ll impact the Europeans over the winter. Just as naturally, some oil experts may downplay the long-term implications of an output cut of 2 million barrels a day.

But the story may very well prove to be a bigger geopolitical realignment that requires a U.S. policy revisit, even if it’s precarious and temporary.