OPEC Oil Cuts: Saudi Arabia’s Turn Towards Non-alignment

The October 5, 2022 decision by OPEC+ to cut oil production at a time of high global energy prices has raised concerns about the durability and strength of the Saudi-U.S. relationship. Since the start of the Russia-Ukraine war in February, the Biden Administration worked to convince the Saudis to do the exact opposite; to increase oil production in order to relieve the upward pressure on energy prices in the U.S. and beyond. Indeed, in July, Biden made an unsuccessful visit to Saudi Arabia to persuade the Saudi leadership to increase production from their vast oil reserves. The subsequent decision by OPEC+ to decrease production, a result of cooperation between Russia and Saudi Arabia to raise revenues, has served as a rebuke to the Biden Administration’s initial attempt to walk back “blank check” US support for the Saudi regime.

Riyadh’s highly visible decision to not only disregard the interests of the United States but to deepen relations with Russia through cooperation on oil prices demonstrates the lengths the Saudi regime will go to project its own interests, especially considering American condemnation of Russia’s war in Ukraine. Additionally, the timing of the decision, just weeks before the midterm elections, despite the Biden Administration’s request to delay it by a month, was provocative. Regardless, these events signal that the Saudis believe they are assured of blank check American support even as they draw closer to Russia and facilitate the deepening of Russian influence in the Middle East. Riyadh has signaled a belief that it can strategically benefit from a relationship with both powers. Amid this new Cold War, the Saudis have chosen a strategy that seeks to balance relationships with both the U.S. and Russia, an approach that diverges from their firm position on the side of the U.S. during the original Cold War.

The OPEC+ oil cut is especially consequential in that it undeniably helps to sustain Russia’s war effort in Ukraine. Reports prior to the decision indicated that the Russian campaign was stalling and that the coordinated Western regime of sanctions was taking a toll on the Russian industrial base’s ability to continue supporting the invasion. The growing desperation in Russia was evidenced by reports of major Russian arms purchases from Iran, including drones and surface-to-surface missiles. Regardless, the decision to cut oil production was made with hopes of maintaining high global oil prices which incidentally would ensure higher oil revenues in Russia, giving them desperately needed resources for the conflict.

Furthermore, Riyadh may have promoted the OPEC+ oil cut for this very reason: to prevent a resounding Russian defeat in Ukraine and the subsequent geopolitical repercussions that would likely follow. Defeat at the hands of Ukraine, aided by Western arms and sanctions, would certainly mean internal instability in Russia. Putin would have to allocate significantly more attention to maintaining his own power and quelling domestic dissent. Available research suggests that authoritarian leaders who are defeated in wars that they instigated face significant political costs at home as the cost of other players coordinating against the existing leader lowers. Additionally, Russian defeat would likely be accompanied by substantial economic losses, further entrenching internal instability, and severely limiting outward power projection through foreign policy.

Saudi officials may want to avoid this outcome so that they can continue to strengthen their policy of strategically benefiting from a relationship with both the US and Russia, or rather one that pits the two in a competition against each other. A situation in which Russia is forced by internal difficulties to disengage from the Middle East would reduce the Saudi ability to leverage their relationship with Russia vis-à-vis the U.S. Riyadh would substantially lose its ability to push back at the U.S. for decisions that the Saudi leadership finds unfavorable, such as the Biden administration’s crackdown on offensive arms sales to the country and calling the country a “pariah”. It would mean that U.S. presidents who do not wish to hand the Saudi leadership a blank check for military support would be able to do so with less fear of retaliation.

The Saudi leadership would likely be more constrained by U.S. interests that do not align with their own if they cannot obtain support from another international power such as Russia, or potentially China, whose president, Xi Jinping, visited Riyadh on December 7-8, 2022 in a blaze of pomp that was more reminiscent of Donald Trump’s trip to Saudi Arabia in 2017 than Biden’s low-key visit to Jeddah in 2022. Furthermore, this is becoming even more important as Democrats and even some Republicans, albeit to a far lesser degree, are becoming increasingly critical of Saudi foreign policy choices. The political backlash in the U.S. to the OPEC+ decision served notice to Riyadh that the blank check is no longer unquestioned in Congress.

This is not to say that this was the sole motivation for the decision to cut oil production. It would be futile to assert that there was no valid economic reasoning to justify the decision at all. There are several indicators that the world is headed towards global recession, which historically results in extreme price volatility in oil markets that damages oil producing nations. The Saudis may want to shield themselves from this fate by reducing production now.

However, there is also substantial economic risk. The move may preemptively trigger the recession the Saudis hope to protect themselves from, especially in Europe which is facing a coming energy crisis evidenced by significant declines in industrial production in Germany. This would hurt oil demand and dramatically lower oil prices. Because of this uncertainty, the geopolitical implications are the undeniable deciding factor; the OPEC+ move signals that Riyadh’s current pivot towards Russia is perceived to be worth the potential economic pitfalls.

Going forward, the OPEC+ decision marks a significant, and potentially worrisome, shift in Saudi foreign policy. The traditional Saudi-U.S. relationship, that was forged during the Cold War, was based on a set of key assumptions: the U.S. would provide the Saudis with arms sales and security guarantees in exchange for stable oil access and Western alignment. Indeed, it wasn’t until 1990 that the Saudis even established diplomatic relations with the Soviet Union. However, the new Saudi strategy, in a status quo where Russia seeks to challenge the U.S. led order and criticism of Riyadh’s human rights record rises in the U.S., is now marked by a tendency towards non-alignment, a major shift in Riyadh’s geopolitical calculus. In other words, the assumptions that have served as the basis of the Saudi-U.S. relationship for several decades are severely called into question – they can no longer be assumed.

Riyadh’s refusal to pick sides, a break from their rock-solid support of the U.S. during the Cold War, poses significant risks for U.S. interests in the Middle East in the future. The OPEC+ decision has made it abundantly clear that American presidents no longer have the luxury of relying on cooperative foreign policy behavior from Saudi leaders to achieve greater geopolitical goals in the region, especially those that oppose Russian goals. They will have to work harder to obtain Saudi support of American priorities and be hesitant about their criticism of the Saudi regime due to the potential backlash. As such, American presidents who do wish to be critical of Riyadh will have to more carefully weigh the consequences of deepened Russian influence in the region and non-cooperation on a variety of foreign policy goals including stable oil markets, peace in Yemen, and counterterrorism. This does not mean that U.S. interests are obsolete; only that securing Saudi support for those interests is no longer a guarantee, but rather something that future administrations must achieve against an increasingly involved Russia.