For years, Saudi Arabia was a close American ally, while Russia was a distant enemy.
That’s why America purchased a lot of oil from Saudi Arabia and very little from Russia. For the period 1973-2005, America’s oil imports from the Saudi kingdom remained steady, in the range of one to 1.5 million barrels per day. Over the same period, America’s oil imports from Russia fluctuated widely, rising from next to nothing in the 1970s and 1980s to a couple of hundred thousand barrels a day in the early 2000s, before falling back to less 38 thousand in 2015.
At times, America had to pay a steep price for excessive reliance on Saudi oil and the OPEC oil. Like back in 1970s when the kingdom imposed an oil embargo on the US.
That’s what makes the “marriage” between the two countries a rather strange affair, in our opinion.
Athens, Greece based International Shipping & Trading Analyst Theo Matsopoulos thinks so. He finds it hard to identify common ground between America and Saudi Arabia.
“The relationship between the USA and the Kingdom of Saudi Arabia (KSA)could easily be characterized by secrets and second thoughts,” says Matsopoulos. “What is the connection of the largest supplier of oil to the US with attacks on American soil, if there is one? What is the vision of the KSA regarding the future of the world? What values does it represent regarding human rights, social justice, freedom of thought and expressing ideas?”
At the same time, Matsopoulos finds common ground between America and a changing Russia. “Russia during past years was an ideological opponent to the USA in matters ranging from economy to social justice. Now things are different. Both seek for geopolitical power and influence,but they play with open cards.”
That’s why he thinks the time is ripe for America to shun Saudi Arabia’s old partnership for a new Russian partnership. “The timing could be right for the US to seal a golden deal with an old enemy which can be a straight and honest partner in the oil market.”
Kevin Rooney, CEO, Oil Heat Institute of Long Island, sees things differently. “While Saudi Arabia is an ally of convenience and (generally speaking) mutual interest, Russia is, as Churchill once noted, ‘a riddle, wrapped in a mystery, inside an enigma’, “ says Rooney. “In light of the recent presidential election and the future uncertainty of US energy politics, to shun the Saudis in favor of Russia would be premature at best. The oil markets are still trying to sort themselves out and determine the best way to balance world demand against the overhang of all-too-abundant supplies in order to stabilize prices. At this juncture, inaction is the wiser and more strategic choice for US energy policy planning.”
F. Gregory Gause III adds another perspective to US-Saudi relations. What ties America and Saudi Arabia together isn’t oil, but geopolitics, he argues.
“Critics also point to the rise in US oil production as evidence that the US-Saudi alliance has outlived its purpose,” says Gregory Gause III in «The Future of US-Saudi Relations,» published in the July/August 2016 issue of Foreign Affairs. “But the ties between the two countries have never been about American access to Saudi hydrocarbons. In fact, when the relationship began in the early decades of the Cold War, the United States did not import a drop of oil from the Arabian Peninsula. What has always undergirded the relationship is the importance of Saudi (and the rest of the region’s) oil to the global market. The Persian Gulf still produces 30 percent of the world’s oil, with Saudi Arabia accounting for over a third of that output. Disruptions in the Gulf thus continue to reverberate worldwide. ”
Simply put, America is standing by to make sure that Saudi oil flows through the Gulf to its Asia allies. That was true back in the old days, that is, when Saudi oil was flowing mostly to Japan, an American ally, ready to shoulder the bill of America’s protection when needed (e.g., during the Gulf War).
But it hasn’t been true in the last two decades, with a big chunk of Saudi oil flowing to China, a non-America ally; and an antagonist in South China Sea where China is trying to write its own navigation rules.
That’s why America should consider breaking the “marriage” with Saudi Arabia, and pit the kingdom against Russia in the oil market so there will never be another oil embargo.
Panos Mourdoukoutas is Professor and Chair of the Department of Economics at LIU Post in New York.