Saudi Arabia colluded with Russia to raise the price of gas in order to help Russia. The move will make inflation worse and undermine efforts to bring down the price of gas in the U.S.
The US has a way to respond to the Saudi decision, which was a blow to the U.S. America shouldn't be giving control of strategic defense systems to an ally of our greatest enemy.
We want to stop all U.S. arms sales to Saudi Arabia immediately. Our colleagues have been considering similar proposals for a long time. We think this time is different because of the blowback to Saudi's involvement with Russia. Our legislation is getting bipartisan support.
What would cause the Saudis to make a mistake like that? The Saudis were acting rationally, according to energy commentators. Ali Shihabi insisted in the New York Times that the move was simply to keep the price in an acceptable band.
This is not justified. The price of oil will be out of a "acceptable band" if there is ever a production cut by the Organization of the Petroleum Exporting Countries. The G-7 oil price caps plan is only for Russian oil.
The leaders of Saudi Arabia can't justify this move because of the global recession. The profit margins for Saudi Arabia are very high. There was no need for Saudi Arabia to reduce supply if they wanted to hurt the U.S.
Russia is the least efficient producer in the group and it has made huge profits recently. The cost to extract oil from Russia is $46 per barrel, while the cost to extract oil from Saudi Arabia is $22 per barrel. Since few others want Russian oil, only Russia has had to offer huge discounts to customers.
Saudi Arabia is important to energy security in the Middle East, to global economic prosperity, and as a regional ally against Iran, but it made a terrible mistake this week. The United States should review its relationship with Saudi Arabia because of the country's support for Russia.
The members of Congress are discussing how to respond. Domestic antitrust laws should be extended to international commerce, according to some. There is a proposal to withdraw US troops from Saudi Arabia. The US would rather have its own troops there than Russians or Chinese.
All U.S. military supplies, sales and other weapons aid to Saudi Arabia should be stopped. There are new and hastily planned testing facilities in Saudi Arabia.
The U.S. has a significant economic and security leverage over Riyadh. The United States supplies the majority of Saudi Arabia's weapons. Unless the country wants to partner with Russia, Iran or China, it can't substitute defense suppliers. While Saudi does source some military technology from other countries, it is usually low grade weaponry and small arms.
Saudi is more dependent on the U.S. for arms than it is on the local defense industry. The outsourcing of sensitive technology and U.S. jobs to Saudi Arabia was started in the year 2017. The U.S. doesn't have similar arrangements with other allies.
Saudi can do little to respond to this proposed legislation other than come back to the table and negotiate with the U.S. It would take decades to transition from the U.S. and UK to other countries. Tanks, communication and other hi-tech equipment are the same. If Saudi were to face a ban on arms sales, it would be difficult to execute a short-term pivot. Until Saudi Arabia reconsiders its embrace of Putin, any ban could be a short one.
Maybe it's worth taking a look at some Russian wisdom of our own. Chekhov warned over a century ago that knowledge is not worth anything unless it is practiced. It might be the same about leverage. Unless used, it is not worth anything.
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