Democrat presidential hopeful Senator Bernie Sanders raised eyebrows on the campaign trail when he referred to Saudi Arabia’s leadership as “murderous thugs”, raising the question of just how concerned the world’s largest oil exporter is of the prospect of a seemingly unfriendly Bernie presidency.
Saudi Arabia’s ‘Murderous Thugs’
How quickly can a President walk back sharp words of rebuke made on the campaign trail?
“For years we have loved Saudi Arabia, our wonderful ally. Only problem is, the people who run that country are murderous thugs,” Senator Sanders said at a town hall meeting on CNN, adding that “instead of being really cozy with Mohammed bin Salman there, the billionaire dictator of Saudi Arabia, I believe—you know, President Obama made good progress in this way and we’ve got to build on that—that we can bring the Saudis and the Iranians together.”
Could a proud Arab leader such as MbS move forward with a US President like Sanders after being called a murderous thug?
Saudi Oil: Friend or Foe?
Saudi Arabia and the United States have enjoyed a symbiotic relationship for years—in fact, since first oil was struck in the Middle Eastern country in the ‘30s. Saudi Arabia is the United States’ largest purchases of military equipment, and the US has purchased a fair amount of oil from Saudi Arabia over the years, reaching a high of 1.9 million bpd in 1992.
According to Bernie Sanders, who is a major subscriber to the lofty Green New Deal that would see the US energy system transfer to 100% renewable energy, the US surely wouldn’t need to rely on Saudi Arabia or the rest of the Middle East for its oil if the plan was successful.
Either way, as far as the United States lessening its dependence on Saudi Arabia for oil, we’re already heading in that direction—Green New Deal or no. Related: Will We Really See Negative Oil Demand Growth This Year?
Today, the United States has already scaled back its purchases of oil from Saudi Arabia. As of the latest data available, the US is taking just 450,000 bpd of the Kingdom’s oil, which is a good thing for a candidate who has alienated one of the world’s largest oil producers, and a good step towards America’s energy independence.
Arms deal aside, how quickly could the United States find alternate sources for this half a million barrels of oil?
The biggest refinery in the United States is the Motiva refinery in Port Arthur Texas. The refinery is entirely owned by Saudi Aramco, and not coincidentally set up to run Saudi grades of crude oil, so a cold-turkey approach should relations go south between the US and Saudi Arabia would affect Saudi Aramco’s own US refinery.
Other US refineries, too, use Saudi Arabia’s grades, but Saudi imports account for just 3% of all crude feedstock—and that includes Motiva. Chevron, Motiva, Marathon, and PBF use most of the oil coming to the US from Saudi Arabia.
Is Saudi Arabia Worried about the Possibility of a Sanders Administration?
That the United States would fear a Sanders presidency is highly unlikely. US President after US President have managed to strike deals with Saudi Arabia and overlook whatever transgressions it must, despite what is said on the campaign trail. Related: The Hydrogen Hype Hits The Middle East
In today’s global society, even an anti-capitalist like Senator Sanders would be powerless to shut out Saudi Arabia to bring about any real change here, and MbS is likely aware of this reality.
Pragmatism or Idealistic?
The truth is, Saudi Arabia has money, and lots of it. The royal family has an estimated $1.4 trillion. And Saudi Arabia “owns” a fair chunk of US debt—$177 billion as of 2019. Saudi Arabia has threatened to sell this debt in a fire sale in the past when the proposed 9/11 legislation was looming over the Kingdom that would allow people to sue the Kingdom for the attacks.
So while Sanders may wish to diminish America’s “love” for Saudi Arabia, and while Saudi Arabia would like to retaliate with their dollars if they are shut out, pragmatism usually wins, and the money—and oil—will likely keep flowing for as long as the market dictate, rather than for as long as politicians dictate.
Yemen
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For years, Iran and Saudi Arabia have been duking it out in Yemen, with the US supporting the Saudi Arabia coalition there. While a sitting Senator, Sanders supported legislation that would end the US involvement in Yemen, which President Trump vetoed.
If elected, Sanders would likely have another bite at this apple.
Of all the concerns that Saudi Arabia could have, lightening up on Iran, and pulling support for the Saudi coalition in Yemen might be at the forefront. But campaign promises being what they are, precious little is likely to change, much to the chagrin of Sanders’ Saudi-hating voter base.
And if President Donald Trump’s history is any indication of how eager foreign leaders are to mend fences with the United States after harsh words were spoken, a Sanders presidency would have only minor damage control to do to make up for some rather uncharitable words spoken against our current ally, Saudi Arabia.
By Julianne Geiger for Oilprice.com
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Saudi Arabia doesn’t need the United States for security or even crude oil sales. On the contrary, it is the United States which badly needs Saudi Arabia. Therefore, it matters not who occupies the White House as long as America’s greedy capitalist system is gaining huge monetary benefits from this association.
There is an erroneous notion that Saudi Arabia needs America’s support for security. Saudi Arabia could easily enhance its security by ending the war in Yemen and reach a rapprochement with Iran so that both can share primacy in the Gulf region with no conflict between them. Furthermore, Saudi Arabia could also enlist the support of Jordan’s armed forces, the best in the whole Middle East, when needed.
And though Saudi Arabia is the United States’ largest purchaser of military equipment at highly inflated prices, it can easily cut out such purchases and buy instead equivalent or even superior Russian military equipment at quarter the cost. Moreover, Saudi Arabia doesn’t need to sell a single barrel of oil to the United States. Saudi crude oil exports are all earmarked for the Asia-Pacific region.
On the other hand, the United States doesn’t need to buy Saudi crude oil or even Middle Eastern oil. Despite shale oil production, the United States still needs to import 8-9 million barrels a day (mbd) of oil which it can get from many sources around the world. If this is the case, then why is the United States maintaining a heavy military presence in the Gulf region and the whole Middle East.Two major reasons for that. The first is the premise that whoever controls the huge oil wealth of the Gulf region and the routes of oil shipments and the Strait of Hormuz controls the global economy. The second reason is to blackmail Saudi Arabia and other gulf oil producers for money by using the threat of Iran as President Trump unashamedly and brazenly regularly demands of them.
The United States could alternatively blackmail Saudi Arabia by threatening to use a US Congress legislation which lifts the immunity on any country whose citizens were involved in 9/11. While it is true that the majority of the terrorists in the 9/11 were Saudis, there is no proof whatsoever that the Saudi government was involved or ever authorized such a terrorist attack. Any clever lawyers hired by Saudi Arabia in America could shred to pieces any such accusations. If this is not enough, the lawyers could also argue that the Saudi terrorists belonged to a Jihadi organization which was created by both Saudi Arabia and the United States to fight the Russians in Afghanistan. This same organization has morphed into ISIS which is fighting the regime of Bashar Al-Assad in Syria with full support from both the United States and Saudi Arabia. The lawyers could argue that if Saudi Arabia is claimed to be involved in the 9/11, then the United States is definitely and equally involved. In such a situation, the Congress legislation applies equally to both the United States and Saudi Arabia.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London
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