• 6 minutes Saudis Threaten Retaliation If Sanctions are Imposed
  • 11 minutes Can the World Survive without Saudi Oil?
  • 15 minutes Saudis Pull Hyperloop Funding As Branson Temporarily Cuts Ties With The Kingdom
  • 2 hours WTI @ $75.75, headed for $64 - 67
  • 7 hours Saudi-Kuwaiti Talks on Shared Oil Stall Over Chevron
  • 53 mins The Dirt on Clean Electric Cars
  • 11 hours OPEC's No. 2 Producer Wants to Know How Buyers Use Its Oil
  • 5 hours Closing the circle around Saudi Arabia: Where did Khashoggi disappear?
  • 13 hours Iranian Sanctions - What Are The Facts?
  • 46 mins U.N. About Climate Change: World Must Take 'Unprecedented' Steps To Avert Worst Effects
  • 7 hours UN Report Suggests USD $240 Per Gallon Gasoline Tax to Fight Global Warming
  • 6 hours EU to Splash Billions on Battery Factories
  • 4 hours COLORADO FOCUS: Stocks to Watch Prior to Midterms
  • 14 hours U.S. - Saudi Arabia: President Trump Says Saudi Arabia's King Wouldn't Survive "Two Weeks" Without U.S. Backing
  • 14 hours Superhumans
  • 10 hours Who's Ready For The Next Contest?
Alt Text

Big Oil Is Back On A Spending Spree

With Brent oil at $85,…

Alt Text

Goldman Warns Of Oil Market Surplus Next Year

Investment bank Goldman Sachs says…

Alt Text

The Oil Markets Are At A Confusing Crossroads

The latest IEA report suggests…

Tsvetana Paraskova

Tsvetana Paraskova

Tsvetana is a writer for the U.S.-based Divergente LLC consulting firm with over a decade of experience writing for news outlets such as iNVEZZ and…

More Info

Trending Discussions

Saudi Crackdown On Canada Could Backfire

MBS

Like many spats these days, the Saudi Arabia/Canada one started with a tweet. Canada’s Foreign Minister Chrystia Freeland called for the release of Samar Badawi, a women’s rights activist who is the sister of jailed blogger Raif Badawi, whose wife is a Canadian citizen.

The arrests had taken place in OPEC’s largest producer and leading exporter Saudi Arabia, which has amassed its wealth from oil and now looks to attract foreign investors as it seeks to diversify its economy away from too much reliance of crude oil sales.

Canada’s foreign ministry’s global affairs office urged “the Saudi authorities to immediately release” civil society and women’s rights activists.

Saudi Arabia—often criticized for its far from perfect human rights and women’s rights record—didn’t take the Canadian urge lightly. Saudi Arabia expelled the Canadian ambassador, stopped direct Saudi flights to Canada, stopped buying Canadian wheat, ordered Saudi students and patients to leave Canada, froze all new trade and investment transactions, and ordered its wealth funds to sell their Canadian stock and bond holdings in a sweeping move that surprised with its harshness many analysts, Canada itself, and reportedly, even the U.S.

The Saudi reaction shows, on the one hand, the sensitivity of the Kingdom to criticism for its human rights record. On the other hand, it sent a message to Canada and to everyone else that Saudi Arabia won’t stand any country meddling in its domestic affairs, or as its foreign ministry put it “an overt and blatant interference in the internal affairs of the Kingdom.”

The Saudi reaction is also evidence of Crown Prince Mohammed Bin Salman’s harsher international diplomacy compared to the previous, ‘softer’ diplomacy, analysts say. Saudi Arabia is also emboldened by its very good relations with the current U.S. Administration, and picking a fight with Canada wouldn’t have happened if “Trump wasn’t at the White House,” Haizam Amirah-Fernández, an analyst at Madrid-based think tank Elcano Royal Institute, told Bloomberg. Related: U.S. Drillers Add Double Digit Oil, Gas Rigs

The United States hadn’t been warned in advance of the Saudi reaction to Canada and is now trying to persuade Riyadh not to escalate the row further, a senior official involved in talks to mediate the dispute told Bloomberg.

The row, however, will not affect crude oil exports from the Kingdom, Saudi Energy Minister Khalid al-Falih has said, adding that Riyadh’s policy has always been to keep politics and energy exports separate.

Canada imports around 75,000-80,000 bpd of Saudi oil, and these barrels can easily be replaced, CBC quoted analyst Judith Dwarkin as saying earlier this week. The chief economist of RS Energy Group referred to this amount as “a drop in the bucket” at less than a tenth of Canadian crude imports compared with imports from the United States, which amount to about 66 percent of the total. The United States could easily replace Saudi crude thanks to its growing production, Dwarkin said.

Still, the strong Saudi message to Canada (and to the world) is not entirely reassuring for the investor climate in Saudi Arabia, which is looking to attract funds for its economic overhaul and mega infrastructure projects worth hundreds of billions of dollars each.

“The Saudi leadership wants to drive home a message that it’s fine to invest in Saudi Arabia and bring your money to Saudi Arabia, but that there are red lines that should not be crossed,” Riccardo Fabiani, a geopolitical analyst at Energy Aspects, told Bloomberg, but warned that such strategy could backfire.

Analysts are currently not sure how the feud will unfold, but Aurel Braun, a professor of political science and international relations at the University of Toronto, told Canada’s Global News that Saudi Arabia is unlikely to back down and reverse all its retaliatory measures without getting something back from Canada. Related: The Unforeseen Consequences Of China's Insatiable Oil Demand

Canadian Prime Minister Justin Trudeau is not apologizing for his country’s call that the Saudis release human rights activists.

“We have respect for their importance in the world and recognize that they have made progress on a number of important issues, but we will, at the same time, continue to speak clearly and firmly on issues of human rights, at home and abroad, wherever we see the need,” Trudeau told a news conference this week.

The economic impact of the Saudi retaliation on Canada is unlikely to be large, but the fact that Saudi Arabia is whipping the oil wealth stick to punish economically what it sees as “blatant” interference with its affairs is sending a message to other countries, and a not-so-positive message to foreign investors.

By Tsvetana Paraskova for Oilprice.com

More Top Reads From Oilprice.com:


x


Back to homepage

Trending Discussions


Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News