U.S. and Saudi officials trade shots over OPEC cuts, testing longstanding ties

An escalating feud between the U.S. and Saudi Arabia got even hotter Thursday in a tense back-and-forth over President Biden’s accusations that a Saudi-approved cut in global oil production was a gift to Russian President Vladimir Putin and a response from the oil-rich kingdom that it would not be bullied.

While analysts said the rare public animosity will not break deeper U.S.-Saudi security, economic and diplomatic ties, the strains in the relationship were evident after officials in Riyadh bluntly rejected Mr. Biden’s criticisms and appeared to suggest not too subtly that the American president’s primary concern was his short-term political interests and the price of a gallon of gas ahead of the Nov. 8 midterm elections.

The White House, lawmakers on Capitol Hill and private market analysts say the planned cuts announced last week by the Saudi-led “OPEC+” cartel of producers — equal to 2 million barrels per day — will effectively give Mr. Putin desperately needed extra revenues to finance his war in Ukraine. Lower production means better prices for Russian gas exports and new upward pressure on the politically sensitive price Americans pay for a gallon of gas.

OPEC’s decision flew in the face of Mr. Biden’s thinly veiled public pleas and private lobbying to Saudi Arabia to keep production up. Mr. Biden on Wednesday announced his administration would re-evaluate bilateral ties and key Democrats on Capitol Hill were saying U.S. aid and arms sales to Riyadh could be curbed or cut off entirely.

“There’s going to be some consequences for what they’ve done,” Mr. Biden told CNN.

Saudi Arabia upped the ante Thursday with a scathing rejection of U.S. accusations that it had sided with Russia,  saying the reason for the production cut was purely economic. 

The kingdom “rejects any dictates,” the Saudi Foreign Ministry said in a statement on Twitter Thursday, saying Riyadh acted to “protect the global economy from oil market volatility.”

“The government of the Kingdom of Saudi Arabia affirms that any attempts to distort the facts about the kingdom’s position regarding the crisis in Ukraine are unfortunate, and will not change the kingdom’s principled position,” the statement continued. 

The Saudi statement also let it be known that the White House had pushed for a one-month “delay” in the production cut announcement — a delay that would have pushed any market reaction past the U.S. midterm vote. John Kirby, Mr. Biden’s national security spokesman, issued an almost immediate response bluntly challenging the Saudi account.

“The Saudi Foreign Ministry can try to spin or deflect, but the facts are simple,” Mr. Kirby said. He said other producers in OPEC+ had privately been ready to delay an announcement but they “felt coerced to support Saudi’s direction.”

The Saudi statement created some immediate political headaches for Mr. Biden and a new opening for Republicans.

Rep. Thomas Tiffany, Wisconsin Republican and member of the House Natural Resources Committee, called for a congressional investigation into whether politics played a role in Mr. Biden’s recent oil diplomacy.

“These are very serious allegations, and if the Biden administration did, in fact, attempt to coordinate with a foreign government to influence the U.S. election, that’s something the American people deserve to know,” Mr. Tiffany said. “[Democratic House Speaker Nancy] Pelosi and Congress have a responsibility to get to the bottom of these deeply troubling reports as soon as possible.” 

Mr. Kirby denied that politics played a role in U.S. appeals to Riyadh. He said the administration presented Saudi Arabia with “analysis to show that there was no market basis to cut production targets” and suggested that OPEC wait until its next meeting set for early December “to see how things developed” before making cuts. 

“The world is rallying behind Ukraine in combating Russian aggression,” Mr. Kirby said in a statement. “The U.S. has played a key role in assembling this coalition, and has engaged the Saudi leadership in that effort.” 

He said Saudi decision-makers knew the cuts would “increase Russian revenues and blunt the effectiveness of sanctions.”

Mr. Biden has not said what concrete things might change after the internal review of Saudi relations, already strained by the 2018 killing of U.S.-based dissident journalist Jamal Khashoggi by a top-level Saudi government hit team in Turkey. U.S.-Saudi links are broad and deep: Some 70,000 American work in the kingdom, the U.S. is a major arms supplier, and Saudi Arabia is seen as the bulwark of a Gulf Arab alliance with Washington to contain regional rival Iran.

And while the oil production cut will benefit Mr. Putin, Saudi Arabia sided with the U.S. this week in a U.N. General Assembly vote condemning recent Russian land grabs in Ukraine, despite a furious lobbying campaign by the Kremlin.
 
“As the president has said, we are reevaluating our relationship with Saudi Arabia in light of these actions, and will continue to look for signs about where they stand in combating Russian aggression,” Mr. Kirby said.

Cooperation and tension

U.S. relations with Riyadh have long been a mix of cooperation and tension. Relations were strained with Khashoggi’s death in 2018,  and Mr. Biden as a candidate for president in 2020 famously promised to make the kingdom a “pariah.”

Saudi Arabia has also felt some friction in the relationship as the U.S. surpassed it as the world’s largest energy producer and powerful voices on Capitol Hill such as Senate Foreign Relations Committee Chairman Robert Menendez, New Jersey Democrat, questioned the bilateral benefits the U.S. was getting from the alliance.

The latest move by OPEC amounts to a firm “declaration of Independence” by the kingdom, according to Middle East Institute’s Director of Arabian Peninsula Affairs Gerald M. Feierstein.

“What the OPEC+ decision makes clear is that the effect of Saudi decision-making on U.S. national interests will be, at the most, one factor among many for the Saudi leadership and will not be determinative,” he wrote in an analysis on Thursday. “It’s unlikely that the decision will have a substantial short-term impact on ties, but it likely cements in place the transactional nature of the bilateral relationship.”

Mr. Biden faced a strong backlash for his July visit to Saudi Arabia for fist-bumping Crown Prince Mohammed bin Salman, who U.S. intelligence concluded had directed the Khashoggi operation. Washington has been deeply ambivalent about the hard-charging prince’s decision to intervene in Yemen’s civil war against the Iran-backed Houthis, with the conflict in the region’s poorest countries producing what aid groups say is one of the world’s worst humanitarian crises.

But the president was willing to withstand the criticism to increase the supply of oil, pushing Saudi Arabia to increase its output by about 750,000 barrels per day as the Ukraine war and sanctions on Russia roiled the markets.

At the time of the visit, the average price of gas in the U.S. was $4.52 per gallon, according to AAA. Prices at the pump have fallen steadily over recent months after hitting a record-high average of $5.01 per gallon in June.

But OPEC’s announcement stands to chip away at Mr. Biden’s goodwill among voters. 

The president defended the trip last week following OPEC’s announcement, telling reporters that the visit “was not essentially about oil,” though he pledged this week that he would reevaluate the U.S. relationship with the Kingdom. 

Mr. Kirby told reporters Tuesday that the president questions whether the country’s relationship with the oil-rich kingdom is “where it needs to be” and whether it is “serving our national security interests.”

Hill Democrats like Mr. Menendez have been far more blunt. He sharply criticized Saudi Arabia for the production cut in a lengthy statement this week and pledged to block “any cooperation with Riyadh until the kingdom reassesses its position,” calling the production cut was a gift to Mr. Putin.

“There simply is no room to play both sides of this conflict — either you support the rest of the free world in trying to stop a war criminal from violently wiping an entire country off of the map, or you support him,” the New Jersey Democrat said. “The Kingdom of Saudi Arabia chose the latter in a terrible decision driven by economic self-interest.”

He added, “The United States must immediately freeze all aspects of our cooperation with Saudi Arabia, including any arms sales and security cooperation beyond what is absolutely necessary to defend U.S. personnel and interests.”

As the White House was announcing the review Tuesday, Sen. Richard Blumenthal, Connecticut Democrat, and Rep. Ro Khanna, California Democrat, introduced a bill that would immediately pause all U.S. arms sales to Saudi Arabia for one year. This pause would also halt sales of spare and repair parts, support services and logistical support.

Saudi Arabia has been a key customer of U.S. arms sales. To date, the administration has notified Congress of more than $4 billion in arms to Saudi Arabia, according to the Washington-based Forum on the Arms Trade, and in August, the administration offered details of a potential sale of more than $3 billion in new arms for Riyadh, including 300 Patriot missiles.


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