31.05.2022 Author: Valery Kulikov

Washington’s Attempts to Approach Riyadh have So Far Failed to Produce Results


The current White House administration, in its blatantly Russophobic policy of imposing restrictive sanctions on the world’s energy purchases from Russia, is not only struggling to cope with rising global oil prices, but also with the record cost of motor fuel at US gas stations, despite its best efforts. Amid a lack of progress in negotiations with oil producing countries to increase production, the United States authorities are forced to be torn between exports and the domestic market, with nowhere to gain traction.

In mid-May, the US exported 74 million barrels of oil and petroleum products, including 30 million barrels of crude oil. While these volumes are not unprecedented, nevertheless, two higher figures were only recorded in 2020, when oil was ultra-cheap, PriceOil service founder Tom Kloza admitted on Twitter. Bloomberg columnist Javier Blas adds that the US is trying to show itself as the last hope for the global economy by exporting more than 10.5 million bpd of oil and petroleum products for a fortnight in a row.

All of this is clearly having a negative impact on the US domestic market: even though US refineries have increased their capacity utilization to 92%, motor fuel prices at US gas stations continue to rise at record levels. Thus, according to AAA, the price of Regular gas has risen by 50% compared to May last year, and the average price of diesel fuel is 75% more expensive than a year earlier. At the same time, stocks of petroleum products in the country’s storage facilities are declining.

This situation and record gas prices are leading to a sharp drop in the incumbent president’s rating and could have a negative effect on the Democrats in the forthcoming midterm elections in the autumn. However, despite Washington’s active demands, OPEC+ participants are in no hurry to change their plans and increase production, arguing that the market is balanced and that the current price imbalance is the result of geopolitical confrontation.

Nevertheless, Washington has not stopped its pressure, persistently persuading Saudi Arabia to increase oil production. To that end, after unsuccessful attempts in March to arrange telephone talks between President Joe Biden and the Saudi leader to discuss the issue, two advisers to the US President arrived on May 24 on a secret visit to Saudi Arabia for talks. Axios learned that these “secret US envoys” were Coordinator for the Middle East and North Africa Brett McGurk and Senior Advisor for Global Energy Security at the US Department of State Amos Hochstein.  Washington believes that should Riyadh respond positively to the request to increase oil production, such a move would allow Biden to lower US fuel prices ahead of the midterm elections and achieve an extension of sanctions on Russian oil.  Washington clearly intends to use its mediation role in talks between Saudi Arabia, Israel and Egypt to persuade Riyadh to take steps favorable to the US, which could be the first step towards normalizing relations between Riyadh and Jerusalem. In addition, the possibility of a visit to Saudi Arabia by the head of the White House as part of his trip to the Middle East in late June was also considered as a “carrot.”

Regarding the subject of Riyadh’s apparent interest in negotiations over the possible transfer of Egypt’s two strategic islands of Tiran and Sanafir in the Red Sea under Saudi sovereignty and Israel’s relevant consent, it should be recalled that the islands have changed hands several times over the past century. At different times they belonged to Israel, Egypt and Saudi Arabia. In a bid to secure Eilat, Israel seized the islands in 1956 and 1967, but returned them both times to Egypt as a result of the peace accords. In 2016, Egyptian President Abdel Fattah el-Sisi decided to hand over the islands to Saudi Arabia, but Israel, in turn, said it would agree to do so if an international force was stationed there to ensure the safety of Israeli ships entering the Gulf. But the issue was never officially ratified.

No official information about the negotiations between McGurk and Hochstein in Riyadh has been published due to their apparent lack of results. Regarding recent contacts with the US, Saudi Arabia’s state-run news agency SPA only reported that Mohammed bin Salman had hosted three members of Congress: Chris Stewart of Utah, Guy Reschenthaler of Pennsylvania and Lisa McClain of Michigan. During the meeting with them in Jeddah, the SPA reports, “the crown prince discussed the bonds of friendship between the two countries and topics of mutual interest.” It is noted that the visit by these administration officials coincided with the 80th anniversary of the US establishing its first diplomatic presence in Saudi Arabia.

Alongside US activity in recent days towards Saudi Arabia, Saudi Deputy Minister of Defense Prince Khaled bin Salman bin Abdulaziz, son of King Salman of Saudi Arabia and younger brother of Crown Prince Mohammed bin Salman, paid an official visit to Washington on May 18. According to media, this was the first official visit by a Saudi government official to the US in six months, as well as the first visit by a senior member of the Saudi government since President Biden took office. During this visit, Prince Khaled held talks with Jake Sullivan, the National Security Advisor to the US President. Prince Khaled himself told Al-Hadath that Saudi-American relations, joint action between the Kingdom and the United States, and “ways to support the relationship as part of our two countries’ shared vision” were discussed.

As for the discussion between Washington and Riyadh on the oil market, Bloomberg published a statement by the Saudi foreign minister on May 25. It points out that there is nothing more the kingdom can do to calm oil markets, implying that the world’s largest exporter of black gold has no plan to accelerate a gradual increase in oil production. His words correlate perfectly with those of Saudi Minister of Energy Abdulaziz bin Salman Al Saud, who pointed out in a May interview that the refining crisis was to blame for the spike in fuel prices. In support of this position, Saudi Arabia and the United Arab Emirates have stated that fuel prices have risen strongly largely due to a lack of investment in refineries around the world operating mostly at full capacity over the past few years, so an increase in crude oil production would do little to help the market.

Regarding the US desire to isolate Moscow over the latter’s special operation to denazify Ukraine, Saudi Arabia has repeatedly stated its support for Russia as a permanent member of the OPEC+ group of oil exporters in official speeches. For example, in an interview with the Financial Times on May 22, Saudi Minister of Energy Prince Abdulaziz bin Salman stressed that he viewed Russia as an integral part of OPEC+ and added that politics should not influence the affairs of the alliance. Meanwhile, Prince Abdulaziz bin Salman also confirmed the sharp rise in prices with taxes and a shortage of refining capacity.

Valery Kulikov, political expert, exclusively for the online magazine “New Eastern Outlook”.

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