- OPEC+ established a cap on oil output against Biden’s request.
- US-Saudi relations are floundering under the leadership of Biden and MBS.
- The Saudi Crown Prince is looking to reduce the kingdom’s reliance on the US.
Why are Biden and MBS frenemies?
Answer: The oil output cap has made both leaders reassess their relationship.
In October 2022, the OPEC+ decided on cutting oil production to 2 million barrels per day. The aim, according to the organization, was providing economic stability and limiting the uncertainty regarding the global market, however, the attainment of this objective is not certain. The decision was driven by the goal of alleviating the energetic crisis and the slow economy derived from the pandemic and the conflict in Ukraine.
The oil cap coincided with the Western price cap on Russian oil and the US midterm elections, which raised concerns amongst the Biden Administration. The US government had appealed to OPEC’s leader Saudi Arabia to restrain from slashing oil output out of concerns of prices rising, along with inflation, right before the balloting. Nonetheless, the decision prevailed and was backed again in February 2023 by the OPEC+ Joint Ministerial Monitoring Committee.
US-Saudi relations have deteriorated with US president Joe Biden, leaving them with the need to reassess the relevance of their alliance. On a personal basis, both leaders have openly shown dislike and distrust towards their counterparts. Biden did not meet MBS for more than a year in office, and labeled Saudi Arabia as a pariah state during his campaign in 2019. The mistrust is mutual. Thus, the animosity between the leaders has only deteriorated the countries’ partnership.
MBS’ support of said decision was disappointing to Biden, who had previously requested the cap not be established. Moreover, by establishing the oil output cap, the Crown Prince conveyed his rapprochement towards Moscow. Saudi Arabia increased its imports of Russian oil, which allows the Kingdom to boost exports of its own reserves, making the high prices derived from the OPEC+ decision benefit Saudi Arabia’s economy.
However, this increase in oil prices does not have a positive effect on the US economy and Biden himself, especially having this happen right before the midterm elections.
Tensions regarding the OPEC+ decision are not the firsts to arise between the two leaders. A halt on arm sales was established by Biden when he first entered into office and following the humanitarian crisis unraveled due to the Yemen war, in which Saudi Arabia was highly involved. This, together with other humanitarian issues have been, in the previous years, a cause for unease in their alliance. For instance, the turmoil around Kashoggi’s killing, which determined MBS’ responsibility but did not entail any sanctions on Saudi Arabia then, has nonetheless marked the relationship between Biden and MBS hitherto.
What does MBS want?
Answer: MBS wants to reduce the Kingdom’s dependence on the US.
MBS has been working towards reducing its reliance on US support in the region and diversifying its alliances. The disappointment over Washington’s poor performance in fulfilling his compromise regarding security issues and the growingly unsteady and distrustful relation between the President and MBS have motivated this change in Saudi strategy. The Kingdom has upheld a neutral-to-unsupportive stance towards the US throughout the Ukraine war and has pursued the diversification and strengthening of other alliances.
Furthermore, Saudi Arabia has recently signed 34 deals in the fields of energy, technology, transport, and construction with China. President Xi Jinping’s recent visit to Saudi Arabia was welcomed by the Arab state in an ostentatious and elaborate manner, contrasting with the more austere reception of the US President on his first visit to the kingdom. This furthering of ties with Xi Jinping has made MBS cautious about his affinity with the Chinese rival, the US, so as to safeguard the Sino – Saudi cooperation.
The growing partnership with Xi, as well as with Putin, does not mean the end of the US-Saudi alliance, whereas further siding with Biden could damage MBS’s relations with the Eastern powers. Hence, the Crown Prince is keen on preserving and widening his alliances with China and Russia while playing down US’s influence in the region.
These diversifying efforts are driven, predominantly, due to US’s low reliability regarding security issues and MBS’ intention to balance their partnership. The intention to reestablish the nuclear deal with Iran has not been well perceived by the Kingdom nor by its allies, who criticize the lack of US protection in the face of Iranian proxy attacks. Still, the US is the main military armament supplier, and no other Saudi ally has the capacity to provide for the Kingdom as Washington does.
By diversifying his alliances and reducing its dependence on the US, MBS does not seek to replace his American ally, he intends to transform Saudi Arabia into a powerhouse in the region.
What does Biden want?
Answer: Biden wants to consolidate international opposition to the Russian economy, and protect his precarious alliance with KSA, while maintaining a strong position at home.
Before the cap on oil production was effective, and in his first meeting with the Saudi Prince, Biden requested the cartel not move ahead with the output slash. This petition came at a critical time for the US: during the Russian invasion of Ukraine, and right before the midterm elections.
Biden employed 200 million barrels from the US’s Strategic Petroleum Reserve (SPR) to maintain domestic stability while safeguarding his government’s power provided he ran for office for a second term. His administration’s high expenditure has already been criticized. Since the beginning of his presidency, Biden has transferred states $60 billion to promote the Infrastructure Bill and disbursed around $370 billion on the Inflation Reduction Act and other hundreds of billions to reinforce the CHIPS and Science Act.
On the other hand, the discrepancy with Biden’s Saudi ally can jeopardize the American position in the regional order. The alliance with MBS, beyond the importance of oil transactions, stands as necessary to maintain the country’s position within the region, making Saudi Arabia a weighty US partner. The Kingdom is crucial for countering Iran’s power. Saudi Arabia’s collaboration on the revived JCPOA would further the coercion of Iran’s nuclear ambitions.
Moreover, the deal prevents Iran from supporting militias working in its interest and sanctions national groups and activities that do so. Isolating Iran is key in the Middle East strategy followed by the Biden Administration, hence the drive to promote regional cooperation. The expansion of the Abraham Accords is another example of the US’s security strategy: by promoting Saudi-Israeli relations, the latter’s regional position would be reinforced and favor cooperation against Iran.
Security issues in the region also hinder human rights, making Biden recalibrate his relationship with Saudi Arabia. After Kassogi’s murder was linked to MBS, the Kingdom remained unsanctioned, and tensions regarding humanitarian violations rose within the alliance. Moral concerns also surrounded Saudi intervention in the war in Yemen, which resulted in a US halt on arms sales. This value divergence between the countries has added to the tensions in the partnership, yet security interests make Biden’s association with MBS favorable for both powers.
What is Biden doing?
Answer: Biden resorted to using the Strategic Reserve to stabilize prices and is advocating for the approval of the NOPEC Bill.
After the OPEC+ decision, seen by the US as a rapprochement of its Middle East ally towards Russia, Biden declared that there would be consequences, however, they have not been specified nor made effective.
Nonetheless, he has acted in sight of the inconveniences caused by the Saudi-led decision. For instance, he used the SPR to stabilize the oil market and lower prices. He proceeded to repurchase oil to pursue his commitment of replenishing the reserve with the ultimate objective of protecting taxpayers and avoiding uncertainty regarding the future demand for oil.
Biden is also advocating for the passing of the NOPEC bill, which stands for No Oil Producing and Exporting Cartels. Passing this bill would mean withdrawing the now-established immunity of the OPEC+ members and companies and would allow the US to sue them and take them to federal court. The Senate has already passed the proposed law, but it has yet to be approved by the House of Representatives. Despite the strains the OPEC+ decision has brought, spheres of the Government and the oil industry are against said bill out of fear it will blow back and promote instability within the market and damage US oil producers.
In the interest of relieving the oil price spike as well as the uncertainty regarding US energetic security, Biden’s administration has recommended executing a drilling project in the National Petroleum Reserve of Alaska that would provide 180,000 barrels of oil a day. The decision to fulfill this project is still undetermined.
Who is winning and what about you?
Answer: Biden has been affected in his approval rate as a consequence of the price increase, however, the US President and the Saudi Prince are in a stalemate as they still need one another.
The OPEC+ decision was perceived by the US as a betrayal as the Saudi ally seemed to be siding with Russia. MBS wants to diversify its partnerships and lessen its dependence on its American ally, drifting into an all-time low in US-Saudi relations. Nevertheless, the powers both need one another. Both in terms of security and investment, neither Russia nor China can replace their partnership, and the US is aware of it.
However, given the circumstances, provided that Saudi Arabia is the leading country in the OPEC and that the decision was made and implemented right before the US midterm elections, it is noticeable that Biden is not winning.
In spite of this, it is unlikely that the US-Saudi alliance will end under Biden and MBS due to the codependent relationship forged between the states. Even if the OPEC+ cap is not a turning point in the partnership, it is and will be, greatly impactful. The decision conveyed Saudi Arabia’s drive to diversify its alliances and resulted in the US intentions to decrease OPEC’s repercussions on the country, accentuating their keenness on decreasing their codependence.