Riyadh’s current stance confirms that Saudi Arabia remains more aligned with Russia than the United States on the global oil stage
“Saudi Arabia Threatens Oil Supply Cuts as Iran Deal Approaches”, is the headline of a reputable International Media whose highlights are as follows:
“The Biden administration’s emerging nuclear deal with Iran is no match for Saudi Arabia.
According to Dan Eberhart, CEO of Canary, a Denver-based drilling services company, it is certainly no coincidence that Saudi Arabia’s threat to cut oil production comes as President Joe Biden moves to revive the 2015 nuclear deal with Iran, which offered sanctions relief in exchange for curbs on the country’s nuclear program.
The original agreement, however, quickly fell apart after then-President Donald Trump unilaterally withdrew from it in 2018 and reimposed sanctions.
“Such a deal would provide economic relief to Tehran and, to a lesser extent, global oil markets, freeing up about a million barrels per day of Iranian oil exports that Western sanctions have curbed. That development, along with concerns about an economic recession, rising inflation and weaker demand, helped drive oil prices below $100 a barrel,” Eberhart wrote in Forbes.
“It’s no secret that Biden wants oil prices, the main driver of inflation, to fall ahead of the midterm elections in November. The president has often pleaded with Saudi Arabia, most recently in mid-July during a visit to Riyadh, to help by adding more barrels.
But Saudi Arabia’s leaders resisted Biden’s demands. This left Iran as the only way to increase the amount of oil on the market. Biden is going down that road, but now he’s seeing the consequences,” he continued, adding that it appears Saudi Arabia wants to set an oil price floor of $100 a barrel in the future.
Eberhart also argued that Riyadh’s current stance “confirms that Saudi Arabia remains more aligned with Russia than with the United States on the world stage.”
“Russia…needs higher oil prices because US and European Union sanctions have hurt its ability to produce and export oil. Moscow must sell its barrels at a steep discount of $30 a barrel to find willing buyers in Asia as Europe turns its back on Russian energy and Western sanctions on the Russian economy tighten,” he wrote.
“This means that the recent drop in oil prices has been particularly hard on Moscow since its oil margins have shrunk significantly. The situation could get worse as the West discusses a price cap system for Russian oil to punish Moscow for its invasion of Ukraine. But the Saudis still see Russia as a critical member of the OPEC+ group and an essential ally in the Middle East, more important than America under Biden,” Eberhart continued.
The bottom line is that “even if the United States and Iran broker a nuclear deal, how much positive impact will it have if OPEC+ cuts production to prevent prices from falling below $100?
“Any hope of oil below $90 for an extended period seems unrealistic under current market conditions,” he concluded.
From the above, we understand that Saudi Arabia and Russia want the price of a barrel of oil to be high, from $100 and above, while the US wants it low and that is why they seek, through the nuclear agreement with Iran, to allow the Iranians to drop the their oil on the International market, dropping the price of black gold.
The question is whether in the end OPEC+ (OPEC countries + Russia) in case of success of the American plan with Iran’s oil, will reduce oil production themselves keeping its prices close to $100 and above.
Such a development would have particularly negative consequences for the EU and consequently for Greece, with the country’s economy and households severely tested in the coming winter, as inflation climbs even higher.
At the same time, the consequences for President Biden in the mid-term elections in November will be negative, an event that Erdogan is looking forward to, considering that this would reflect on the positions of the US in Greek-Turkish relations, to the detriment of our country