The absence so far of oil or natural gas sanctions on Russia for invading Ukraine is not because they aren’t potentially useful. In fact, they could be crucial. But, it seems, the White House doesn’t yet have all its ducks in a row. I am willing to wager that the awkward “duck” is Saudi Arabia.
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Media www.rajawalisiber.com – The challenge is complicated: Washington wants to put pressure on Russian President Vladimir Putin by denying him oil and natural gas revenues. But the world needs Russian oil and gas. So, part of the solution is to produce more oil; hence, the announcement by President Biden to take another few sips from the U.S. Strategic Petroleum Reserve, the SPR. While a positive contribution, this won’t impact prices to the extent that they stop going over the headline-making $100 per barrel level.
(Natural gas is a separate and perhaps more esoteric issue. So far, there is no indication that Moscow will stop supplying Europe with its gas. And anyway, spring is almost within sight and so the urgency for gas will decline.)
On oil, the principal obstacle is OPEC+, the informal cartel combining the old-time, Saudi-led oil producers and non-OPEC producers, led by Russia but including other significant oil exporters such as Kazakhstan. OPEC+ is due to meet on March 2, although it probably will be just the oil ministers of Saudi Arabia and Russia chatting by Zoom.
For their own reasons, both likely will want to keep prices high, conceding at best only a minor increase in production, if that. Russia, of course, wants all the revenues it can get. Saudi Arabia’s public reasoning will be that it has ambitious development plans that need funding.
It probably will come down to personality. Although neither likely will be on the call, the two chief players will be Putin and Crown Prince Mohammed bin Salman of Saudi Arabia, aka MbS, the kingdom’s de facto ruler given the age and infirmity of his father, King Salman. Although there was a silly oil price argument between them in early 2020 that caused prices to plummet, they appear to be birds of a feather. At the 2018 G-20 summit in Buenos Aires, less than two months after dissident Saudi journalist Jamal Khashoggi was murdered in the Saudi consulate in Istanbul, Putin was the only world leader visibly friendly to MbS. Photos of the two men high fiving each other still cause some people to shudder.
Although Saudi Arabia historically has been seen as Washington’s ultimate ally in the oil world, MbS seems to take a different view. He is said to be resentful that President Biden is not prepared to have a one-on-one meeting with him, either in person or by phone. Why? It’s not clear, but Khashoggi’s demise probably would be a good bet.