COVID-19 And Oil Market Crash Could Spell Different Future In U.S.-Saudi Relations

History has shown that big changes in energy markets often mark a big change in geopolitics. In the 20th century, the shift from coal to oil catapulted the Middle East into strategic significance, and a recent boom in shale oil transformed the United States into a net oil exporter. Drops in oil prices due to the COVID-19 pandemic may be the latest change that could reorder global power relationships.

As prices of the U.S. benchmark crude turned negative for the first time in history, the reality of U.S.-Saudi relations came into focus. The 75-year alliance between Washington and Riyadh has been held together through mutual business interests, however it has not been smooth sailing. The U.S. economy fell into a recession in 1973 after an oil embargo by the Saudi-led Organization of the Petroleum Exporting Countries (OPEC). Images of American motorists in lines to fill up their tanks are still etched in the nation’s consciousness. More recently, Saudi Arabia has been linked with the 9/11 attacks carried out by 19 hijackers, 15 of whom were Saudi.

Now, whenever oil prices become uncomfortable for U.S. consumers and businesses, the No Oil Producing and Exporting Cartels Act (NOPEC) makes a reappearance on Capital Hill. The act takes aim at OPEC’s price fixing and would strip Saudi Arabia of the sovereign immunity that shields the country from lawsuits in the U.S., but the legislation has struggled to find White House support. Since Donald Trump took residence at 1600 Pennsylvania Avenue, relations between Washington and Riyadh have warmed significantly. Trump withdrew from the Iran Nuclear deal in 2018 and slapped economic sanctions on Tehran, much to the delight of Iran’s rival Saudi Arabia. Trump has even authorized weapons sales to Saudi Arabia, despite its human rights record, and his son-in-law Jared Kushner has forged a close relationship with the country’s ruler, Crown Prince Mohammed bin Salman (MBS).

With some U.S. oil firms edging towards bankruptcy and the unemployment threat to the Americans employed by the energy and gas sectors, the COVID-19 oil crash may strain the strengthened relations with and provoke backlash against Riyadh. Bruce Riedel, a senior fellow and director of the Brookings Intelligence Project, told Al Jazeera, “The United States-Saudi Arabia relationship was in trouble before the coronavirus and oil double-crisis. The Saudis are now losing support across the board politically. Trump and his son-in-law Jared are the only holdouts and that is not a good place to be when oil prices are so low.”

With tens of thousands of energy jobs in Republican-controlled states at the risk of vanishing, U.S. lawmakers who had previously supported the status-quo in U.S.-Saudi relations are calling for a ban on crude imports from the Kingdom, according to Al Jazeera. A March 24th letter addressed to Secretary of State Mike Pompeo signed by six U.S. senators, accused the Kingdom of Saudi Arabia and the Russian Federation of “economic warfare” against the United States. The senators introduced the Strained Partnership Act, which called for the removal of U.S. troops and military equipment from Saudi Arabia unless it slashed output.

In response to Congressional pressure, Trump appealed to MBS and Russian President Putin to call a truce on the Saudi-Russian feud and stabilize oil markets. Trump’s efforts culminated in an April 12 agreement by OPEC and its allies to scale back oil production by 9.7 million barrels per day, though the pandemic caused a demand decrease of at least 30 million.

But, Saudi Arabia and other OPEC members had several other motives for agreeing to curb oil production. For Saudi Arabia, the sharp increase in hostility from members of Congress who in the past seemed to appreciate the multifaceted relationship between the two countries were one of those reasons. The current oil crisis revealed that once supportive members of Congress were willing to upend economic, military, and diplomatic ties if Saudi Arabia did not curb is production to protect the American oil industry by stopping the free fall of oil prices.

The oil crisis pulled back the curtain to reveal the fragility in the bilateral U.S.-Saudi relationship. If oil prices continue to fall, members of Congress may push to punish Riyadh and weaken relations with the kingdom. As the Middle East cannot afford anymore destabilization, the U.S. must continue to keep in mind the geopolitical consequences as it navigates the oil crisis.


The Organization for World Peace