Even before Russia invaded Ukraine, surging oil prices had sent stateside inflation to its highest level in decades. Domestic oil prices had surged to more than $130 per barrel and more than $4 per gallon.
President Joe Biden has once again resorted to begging his former foes to bail him out of this costly crisis. First on the list for Biden to broker a visit to, according to Axios, is Saudi Arabia. Hans Nichols reports that the president’s advisers are planning a visit to “repair relations” with the Middle Eastern nation and “convince the Kingdom to pump more oil.”
It doesn’t take much insider knowledge of the game being played to declare with confidence, “Fat chance!”
It is not and never has been in the financial interest of Saudi Arabia or in the political interest of Crown Prince Mohammad bin Salman to cower to Western consumer desire for cheaper oil. And Biden has burned through whatever goodwill he might have had.
Biden spent his first year in office squandering the diplomatic goodwill that former President Donald Trump had built up with Saudi Arabia. While campaigning for office, he ripped Saudi Arabia in order to earn some lefty street cred from Jamal Khashoggi’s buddies in the legacy media. This did not result in any sort of substantial punishment for the Saudis, but it did upset them. Now, when Biden has no leverage over the prince, he is begging him to commit political suicide.
Like other young reformers sparring with radical Islamists in the region, MBS is a wannabe enlightened absolutist — an authoritarian with noble enough goals of modernizing his nation’s customs and material quality of life but with little regard for the brutality required to achieve such goals. Key to his success are oil exports, which fund three-quarters of the current national budget.
MBS may be a dictator who killed Khashoggi in cold blood, but he is also, despite appearances, a relatively secular nationalist at heart, keen to purge radical Wahhabism from his country and bring it into the 21st century. Like all utilitarians, MBS clearly seems to think that all of the jailing (or murdering, if you believe Western intelligence) of dissidents and consolidation of power is worth it for the bottom line. For MBS, that is Vision 2030, his plan to channel the country’s oil revenue — including from Saudi Aramco, the world’s most profitable company, which held the biggest IPO in history — into investments to diversify the Saudi economy permanently for a world after oil.
So why would MBS intentionally limit his own career-defining profits, especially when circumstance has handed OPEC more control of the oil market than the Saudis could have ever dreamed of?
Saudi Arabia, a founding member of OPEC, spent much of 2020 in a standoff with Russia, hoping to cap global oil supply and offset the collapse in demand that the pandemic brought about. Russia is currently responsible for 7% of global oil exports, as well as 7% of American oil imports. Prices stay astronomically high if America continues to buy from Russia. They go even higher if the U.S. finally relents and imposes a ban. Either way, Saudi Arabia gets even richer.
Saudi Arabia proved a crucial diplomatic ally in the Trump administration’s goal to reorient Middle Eastern power away from Iran and toward the peace plans of the Abraham Accords. On politics, MBS proved more than willing to play ball. But with the largest profit margins in history on the line, Saudi Arabia has no reason to bail out anyone, much less Biden, whose bark wound up much, much bigger than his bite.
