Peace Breaks Out In The Middle East As US Influence Declines: From OPEC To OPEC+

Tilak Doshi writes at Forbes:

Historians will mark the low point of Pax Americana in the Middle East by several rather brutal humiliations that American prestige has undergone under President Joe Biden’s presidency. Examples would include having phone call requests by the US president declined by Saudi Arabia and the United Arab Emirates in March last year and mass media pictures of the impersonal fist-bump between Joe Biden and de facto ruler and Crown Prince of Saudi Arabia Mohammed Bin Salman (or “MBS” as he is familiarly called) in July.

The US president had come to Riyadh with a begging bowl but failed to convince the Saudis to rescue the US gasoline market from high prices by opening the Arab oil tap in time for the mid-term US elections. This was after the President Biden had promised to make the Kingdom a “pariah” during his 2020 election campaign in response to the killing of Adnan Khashoggi.

With the decline of US dominance in Middle East security affairs, a spate of intra-regional diplomatic moves towards peace seems to have broken out. This might sound ironic to observers of American diplomacy and military power in the region. But an assertive Saudi foreign policy under its Crown Prince and the vastly altered circumstances caused by Western sanctions on Russia’s oil and gas exports saw Riyadh distance itself from Washington.

It is a comprehensive article about the decline of US influence in the Middle East due to the policies of the Biden Administration.

The Middle East regional order has undergone a dramatic realignment under President Biden’s watch. Following the landmark Chinese-brokered deal between Saudi Arabia and Iran on resuming ties last month, the US was again left on the sidelines a few weeks later. It could only passively observe yet another major diplomatic initiative, this time between Saudi Arabia and Syria, mediated by Russia. After rounds of discussions in Moscow and Riyadh in recent weeks, the emerging Damascus-Riyadh rapprochement is signalled by a series of reciprocal state visits by the region’s leaders.

At a stroke, MBS displaced the “oil-for-security” deal that has lasted over three quarters of a century between the US and Saudi Arabia since Franklin D. Roosevelt’s historic meeting with King Ibn Saud in 1945.

It gives a history of the relationship between the US and the Kingdom of Saudi Arabia as well as the OPEC Block

The Yom Kippur War (1973) and resultant OPEC embargo that led oil prices to skyrocket in the United States threatened the status of the fiat dollar. In the wake of the oil price shock, President Nixon empowered then secretary of the Treasury, William Simon, to get the Saudi monarchy “to finance America’s widening deficit with its newfound [oil] wealth.” In a further elaboration of the original Roosevelt-Ibn Saud “oil-for-security” deal, the Saudis under King Faisal promised to denominate global oil purchases only in dollars and in return Washington would provide military aid and materiel to the Kingdom. The quid pro quo came in the form of guarantees that the Saudis would “plow billions of their petrodollar revenue back into Treasuries and finance spending” of every US administration since.

Doshi discusses the failure of Western Sanctions imposed upon Russia since the beginning of the 2022 invasion of Ukraine

The Russian economy is now slated by the IMF’s latest economic outlook to outperform Britain and Germany this year. Russia posted a record current account surplus of $227 billion in 2022, up 86% from 2021. Russia replaced revenues lost from its oil and gas exports to Europe with a pivot to China, India, UAE, Turkey and other countries not participating in the Western-led sanctions (i.e. the rest of the world outside the “collective West”). Its oil export levels have not seen any significant reduction. Last week, Reuters reported that oil loadings from Russia’s western ports in April rose to the highest since 2019. Though sold at discounted prices, Russian oil and gas exports to markets in the “Global South” have enjoyed relatively high international commodity prices even if below the peaks immediately after the Ukraine invasion.

Gone are the days when the OPEC cartel with its Saudi lynchpin played a role as the US-allied “central banker of oil”, opening the oil spigot if oil prices went too high for the Western-dominated global economy. It is the OPEC+ group that is now in the driver’s seat, combining Saudi Arabia (and its Gulf allies) with Russia. The former is the world’s largest exporter of crude oil while the latter is the world’s second largest oil exporter and largest natural gas exporter. Absurdly enough, the third heavy weight contender in the global oil and gas trade, the US itself, is hobbled by an administration which boasts a ‘whole-of-government’ commitment to anti-fossil fuel climate policies.

To read the full article at Forbes click here.

via Watts Up With That?

April 29, 2023 at 09:11AM

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