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Tim Daiss

Tim Daiss

I'm an oil markets analyst, journalist and author that has been working out of the Asia-Pacific region for 12 years. I’ve covered oil, energy markets…

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Trump’s New Ambassador Scrambles To Salvage Relationship With Riyadh

The Senate has confirmed President Trump’s nominee to be the new U.S. ambassador to Saudi Arabia. Though Trump has been in office for more than two years, it will be the first ambassador of his administration to this key middle eastern ally. The Senate approved retired Gen. John Abizaid by a 92-7 vote on Wednesday. The vote comes almost five months after Trump first announced his intention to nominate Abizaid, a 68-year-old retired four-star Army general, who led U.S. Central Command during the contentious Iraq war.

There are several takeaways from Abizaid’s confirmation. First, he fills a 27 month gap of the U.S. not having an ambassador to Saudi Arabia, a period that saw the best bi-lateral relations between Washington and Riyadh in years, likely since the administration of George Herbert Walker Bush during the first Gulf War when the U.S. helped protect the Kingdom against the possible Iraqi invasion.

Moreover, unlike several of his predecessors, Trump has not pushed Riyadh over allegations of human rights abuses. In this light, the president seems to have a basic twin agenda with Saudi Arabia.

Trump’s Saudi agenda

First, Trump sees Saudi Arabia as an integral part of his plan to offset Iranian hegemony pursuits in the Middle East. Second, and perhaps even more difficult to pull off, he wants to be able to influence Saudi oil production to help keep oil prices down and keep a lid on domestic gasoline prices. On the first count, Trump has largely been successful. A combined U.S.-Saudi front is serving as a check against Tehran’s ambitions in the region, while it was reportedly Saudi Arabia that was instrumental in persuading Trump to reimpose fresh sanctions against Iran’s energy sector. Related: BP Pulls Out Of China’s Shale Patch

On the second count, the president has had mixed results. Last fall, he was successful in convincing Riyadh, mostly via Twitter comments, to increase oil production in an effort to put downward pressure on global oil prices. In fact, at the time there was concern that the Saudis were nearing the limits of their spare production capacity as it sought to appease Trump. However, the president committed a vital mistake. He offered numerous waivers for Iranian oil without consulting Riyadh. It was a move that caught Saudi Arabia off-guard and created an element of distrust between this firebrand president and Riyadh. Since his initial waivers for Iranian oil customers last year, Trump’s calls and Tweets for the Saudis and OPEC to ramp up production as oil prices hit five-month highs have largely fallen on deaf ears.

Abizaid’s influence

Enter the confirmation of Abizaid as the new U.S. ambassador to Saudi Arabia. During his Senate hearings, while being peppered with questions about how the U.S. should deal with Saudi Arabia as well as Saudi Crown Prince Mohammed bin Salman over their purported involvement in the killing of Saudi dissident journalist, U.S. resident, Jamal Khashoggi, the retired general was a voice for moderation and calm.

Related: Is This The End Of The OPEC Deal?

He defended the relationship between the U.S. and Saudi Arabia as strategically important during the hearings, but also called for accountability over Khashoggi’s murder, and also said he supported human rights. He added in comments to the Senate Foreign Relations Committee that “In the long run, we need a strong and mature partnership with Saudi Arabia… It is in our interests to make sure that the relationship is sound.”

Going forward, Abizaid’s appreciation of Washington’s 70-plus year integral, albeit complicated relations with Riyadh will not only help stay the hand of U.S. lawmakers still upset over Khashoggi’s killing who are calling for stiffer  sanctions against the Kingdom, he will also help set the Trump administration’s dialogue with the Kingdom back on even keel, hopefully repairing the confidence lost when the president granted his first set of Iranian oil waivers without first consulting Riyadh. If Abizaid can pull this off, Trump will have more success in the future when he calls for Saudi Arabia to help bring down global oil prices by kicking up production. This is of vital interest to Trump as the 2020 election cycle kicks in with higher gasoline prices across the country.

By Tim Daiss for Oilprice.com

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  • Mamdouh Salameh on April 14 2019 said:
    Retired US General John Abizaid who has been confirmed as the new US ambassador to Saudi Arabia is a distinguished American commander of Lebanese descent and fluent in Arabia having been an Olmsted Scholar at the University of Jordan in Amman. He impressed his teachers at Harvard University. Nadav Satran, the director of the Harvard Centre for Middle Eastern Studies kept Abuzaid’s 100-page paper on defence policy for Saudi Arabia, the only paper on a Master’s student he has kept, saying, “It was absolutely the best seminar paper I ever got in my 30-plus years at Harvard”.

    Despite his accolades, General Abizaid will face his toughest job yet overcoming distrust between Saudi Arabia and the United States, repairing relations between the two countries and maintaining US-Saudi relations on an even keel.

    Through his study of history, General Abuzaid must have realized why Russia’s popularity and respect in the Middle East and the world are soaring while the United States’ are plummeting. A case in point is Syria where Russia has been exemplary in its loyalty to Syria from which it hardly expects to get any economic or military benefits. Contrast this with the United States’ continuing to play Saudi Arabia against Iran in order to blackmail the Saudis and extract economic and military benefits from them. The United States has the tendency to drop its allies like a squeezed lemon once it has got all the juices from them.

    The claim by President Trump that the United States protects the oil-producing countries of the Arab Gulf is a brazen and crude attempt of blackmailing these countries and getting US hand on their money. The only threat facing these countries is Israel which is provided with money and the most sophisticated weaponry by the United States to maintain its threat and military supremacy in the Middle East. America and Israel are one and the same and they pose the most serious threat to countries of the Middle East.

    Saudi Arabia has become very wise to the United States’ ploys. It will never permit itself to be conned again by President Trump to raise its oil production to keep prices in check having done so in June last year to offset a so-called decline in Iran’s crude oil exports and ended up with US sanction waivers to eight countries buying Iranian crude and with a collapse of oil prices by 43% in November 2018.

    Another major issue facing General Abizaid is the Trump administration's threat to sue Saudi-led OPEC for alleged oil price manipulation and cartel-like practices under the NOPEC legislation.

    Nobody should have any doubts about Saudi Arabia’s retaliation. The Saudi threat against the petrodollar should be taken very seriously since Saudi Arabia played a pivotal role in bringing the petrodollar into existence in the aftermath of the collapse of the God Standard in 1971. Were the Saudis to drop the petrodollar, they will most probably be followed by the overwhelming majority of OPEC members. That would lead to the collapse of the petrodollar with catastrophic impact on the US economy

    The petrodollar system provides at least three immediate benefits to the United States. (1) It increases global demand for US dollars. (2) It also increases global demand for US debt securities and (3) It gives the United States the ability to buy oil with a currency it can print at will. In geopolitical and economic terms, the petrodollar lends vast power to the United States. Maintaining the petrodollar is America’s primary goal.

    Another measure the Saudis could take is to try to reach some sort of a rapprochement with Iran thus upsetting President Trump’s and Israel’s plans against Iran and changing the whole geopolitical scene in the Middle East.

    Dr Mamdouh G Salameh
    International Oil Economist
    Visiting Professor of Energy Economics at ESCP Europe Business School, London
  • great boy on August 06 2019 said:
    very good and informative post

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