Saudi and American oil clash .. Will it pave the way for a future battle?

The Kingdom of Saudi Arabia and the United Arab Emirates are putting their relations with the United States at risk, as a result of a conflict of interests that became evident with the outbreak of the recent oil price war, and this remains true even if the war is not sustainable in the midst of the Corona pandemic. 

In a report published by the American "Modern Diplomacy" website, the author, James M. Dorsey said that until now Saudi Arabia has been the focus of the United States' anger against the background of its indifference and recklessness, while the UAE managed to escape the American radar, despite its announcement that it will increase production to support the price war with Russia.

The question remains: How long can the UAE escape from US anger? 

The writer stated that an immediate crisis was averted by an agreement last Sunday, April 12, between members of the Organization of Petroleum Exporting Countries and non-OPEC producers to reduce production by about ten million barrels per day. 

But one day after the agreement, 13 Republicans in Congress - representing the oil-producing states - warned Saudi Arabia, through a two-hour phone call to Saudi Energy Minister Abdulaziz bin Salman.

"While we appreciate the Saudis taking the first step toward solving the problem they contributed to, they spent more than a month waging a war against American oil producers, and all that while our forces were protecting them," said Kevin Kramer, a Senator from North Dakota, in this regard. .

"This is not how friends deal with each other. Their actions were unjustified, and will never be forgotten, and the next step that Saudi Arabia will take will determine if our strategic partnership is salvageable," he added.

A long-term battle
The writer explained that the notice of members of Congress reflected the deterioration of the Kingdom's relations with Congress over the past two years, and the American President Donald Trump's anger at the Saudi price war.  

But there is a ray of hope for the relief of the American-Saudi clash over oil prices. In fact, this clash illustrates the long-term relationship between the two countries, according to what the author believes

And with its keenness to hit the American oil shale industry, which provides about ten million jobs, Saudi Arabia has indicated that it will continue to work to achieve its interests, regardless of the concerns of the United States, or if the world is going through a massive economic setback due to the Corona epidemic, according to the author.  

The writer quoted Ali Shihabi, a former political and banking analyst - who often reflects the Saudi view - as saying, "The kingdom will have to reduce budget expenditures while assessing its financial reserves for basic spending, because it is fighting a long-term battle, and remaining in it for the strongest in order to obtain a share of the market." Global energy. "

The writer explained that it was possible for the United States to direct its anger also towards the United Arab Emirates, which soon announced its support for the Saudi move to push prices below the break-even point compared to the prices of American oil shale, by dumping the market with oil.

He said that, in light of Saudi warnings and the possibilities that the UAE would follow, members of Congress would draw battle lines for a renewed Saddam in the future, perhaps becoming more inevitable as a result of the Corona epidemic and its economic repercussions. 

Low costs
with a possible decrease in the value of oil reserves and gas stocks during the coming decades due to the prominent emergence of oil shale and renewable energy sources; Saudi Arabia needs to secure its market share by taking advantage of the low costs, knowing that it has one of the lowest production costs in the world, as the author says .

It stresses that the collapse of demand, low prices and the global economic downturn increase the importance of market share. Saudi Arabia is likely to have to reduce tempting projects, such as the "NEOM" project (the future city on the Red Sea), and focus on revenue and sectors that generate jobs. 

In this context, the writer says that some economists believe that Saudi Arabia - and other oil producers - may seek to create jobs and local and regional petrochemical markets by advancing the development of the plastics and chemical industries.

Some indicators also indicate, according to the author, that Saudi Arabia could return to focus on energy derivatives, through the acquisition of a number of companies in Europe.

The writer quoted experts as saying that the current crisis represents a test of the progress made by the "Saudi Vision 2030", especially its programs to reduce unemployment and diversify the economy away from oil.