Saudi Arabia, despite having a U.S. military "umbrella" over it for decades and having a hugely beneficial economic relationship with the United States, has never been fully allied with us, preferring to play realpolitik games. Partly, it's due to their absolute monarchy's hedging its bets with the West, as well as its fear of the anti-American "Arab street." Now, Ryan Hogg at Fortune Magazine writes that the Saudis have plans to cut prices in an attempt to increase market share, which would have a major impact on the Russian regime's ability to finance its war in Ukraine:
"Russia’s war machine in Ukraine has been funded for two and a half years by its vast oil reserves, even in the face of rising sanctions that have cut it off from key Western customers. However, a bold move by Saudi Arabia could jeopardize that strategy.
Saudi Arabia is reportedly planning to abandon its unofficial price target of $100 per barrel for crude oil in a bid to grab market share by upping supply, according to a Financial Times report in September.
A potential increase in supply set the price of OPEC+ oil, which represents 60% of oil traded globally, tumbling in the wake of the news, suggesting that the post-COVID era of high-priced fossil fuels could be coming to an end." (our emphasis)
Hogg notes that one of the aims of the Saudis is (naturally) to challenge U.S. crude oil production, which, along with Russia's, is more difficult and expensive to extract. Nonetheless, it would have far more impact on the Russian regime:
“'For Russia, this is the worst of both worlds,' Luke Cooper, a research fellow at the London School of Economics, wrote for the IPS journal.
'Unlike the United States, it has an oil-dependent economy, which benefits from the cartel power of OPEC+. Yet, unlike Saudi Arabia, its oil is not cheap to extract, making it poorly equipped to deal with low-price conditions.'" (our emphasis)
For once, the Saudis may be doing us -- and especially Ukraine -- a favor.
(photo: "I have a surprise for you, Vlad." Amilcar Olfali / Getty)
