President Joe Biden has made no secret of his displeasure with Saudi Arabia for cutting oil production.
With the global economy on a knife-edge and energy prices high, Washington sees the kingdom's move as a snub and a show of siding with Moscow.
In October, the oil producer group announced its largest supply cut since 2020 in order to spur a recovery in crude prices to counter a potential fall in demand.
Biden told CNN that there would be consequences for this. He didn't say what the consequences might be.
What are the options for the Biden administration to take?
Energy for security is what the Saudi-U.S. relationship was founded on. Saudi Arabia has received billions of dollars in military and security aid from the US. Since the Obama administration began making diplomatic inroads with Iran, Riyadh believes that the U.S. commitment to its security has waned.
"Neither side has been holding up their end of the bargain for over a decade now," said Michael Stephens, an associate fellow at the Royal United Services Institute in London.
The relationship is fractured because neither side sees as much benefit in the other as they did 20 years ago.
Washington can cut its military support to the Saudi kingdom, as well as go after the Organization of the Petroleum Exporting Countries with U.S. laws.
A file photo of cannisters containing Patriot missiles to intercept missiles fired at Saudi Arabia or its neighboring countries.Just one day before Biden's comments, the chairman of the Senate Foreign Relations Committee demanded that the US stop all cooperation with Saudi Arabia.
"The United States should 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," he stated.
In an interview with CNBC, Sen. Chris Murphy asked, "What's the point of looking the other way if the Saudis choose the Russians over the journalists?"
If Saudi Arabia, one of the worst violators of human rights in the world, wants to partner with Russia, it can get Putin to defend its monarchy. The price of oil in Saudi Arabia must be stopped.
There are legal channels the U.S. government can use.
No Oil Producing and Exporting Cartels is one of the bills. Anti-trust legislation would be applied to the members of the group.
The bill is designed to protect Americans from oil spikes.
It passed a Senate committee in early May and hasn't been signed into law, but it could expose OPEC countries and partners to lawsuits for coordinating supply cuts that raise global crude prices
The bill needs to be passed by the Senate and House before it can go into effect. The NOPEC bill would bring more chaos to the energy markets, warned the ministers of the Organization of the Petroleum Exporting Countries.
The Biden administration has lost its ability to influence Saudi Arabia's policy after the decision by the Organization of the Petroleum Exporting Countries to cut its output.
The White House has few good options after Biden warned of consequences, he said.
This could backfire on both the U.S. and crude prices.
Soltvedt said that both of the options would put upward pressure on oil and fuel prices.
A breakdown in U.S.-Saudi relations would cause a higher Middle East risk premium for the global oil market. The White House is trying to achieve something different than this.
Several member states have already been far short of their individual production ceilings, and Iraq has indicated it will be producing more than its assigned quota.
Many American politicians have been out of patience with the nature of the U.S.-Saudi relationship, especially as U.S. imports of Saudi oil have shrunk over the years.
Soltvedt said that a growing number of U.S. lawmakers were questioning why the American navy should protect Middle Eastern oil exports.
Sam was a contributor to this report.
All Rights Reserved © 2024
