The U.S.' Return To Its "Denial Oil" Strategy Is Critical

Amidst the growing influence of American rivals in the Middle East, the United States appears to be reassessing its ties with regional allies just as it nears completion of its pullout policy from the region. President Biden's administration has initiated a re-evaluation of U.S. policy toward the Middle East, despite recent attacks on American sites in Iraq, Syria, and Jordan aiming to compel a full withdrawal of American forces. While returning to the Middle East presents challenges for the United States, a region that has profoundly shaped American foreign policy for nearly fifty years, it could also afford an advantage over global rivals, Russia and China.

Challenges in U.S.-Middle East Historical Ties

Strategic ties between the U.S. and the Middle East, forged post-WWII with Iran under the Shah and Saudi Arabia, centered on the "Denial Oil" policy against the Soviet Union, have faced criticism on several fronts. Factors including unrecouped expenditures, failure to democratize Middle Eastern governments, high U.S. casualties in successive wars, and diminishing significance following the Soviet Union's collapse and the 9/11 attacks have all contributed to scrutiny of these ties. Moreover, a significant shift away from importing crude oil from Persian Gulf countries towards reliance on domestic production and neighboring nations like Canada and Mexico has led some to perceive reduced dependence on Middle Eastern energy sources, providing justification for withdrawal policies.

The United States' withdrawal from Afghanistan was interpreted as a signal of disengagement from Middle Eastern conflicts, especially after its inadequate response to attacks on Saudi Arabia's Aramco and the United Arab Emirates' Abu Dhabi airport. Consequently, regional nations have pivoted towards strengthening relations with Russia and China.

Expanding Influence of Russia and China

While the United States faced militia attacks in Syria and Iraq post-ISIS war in 2017, China and Russia significantly expanded their presence in the Middle East's oil and gas sectors. Under Xi Jinping's leadership, Chinese oil companies expanded overseas operations, notably in Latin America, Africa, and the Middle East, boosting crude oil and natural gas production. With major American oil operators sidelined, Chinese firms, alongside Russian counterparts, now dominate Iraq's oil production. China's strategic partnerships in the region, including lucrative investment agreements with Iran and Iraq, have bolstered its status as the top oil consumer, surpassing both the United States and the European Union.

The deepening cooperation between China and Middle Eastern countries not only ensures energy security for China but also facilitates significant investments in Chinese oil and gas downstream sectors. This has redirected substantial capital flows from Western countries, including the United States. China's Belt and Road Initiative has further cemented its ties with the Middle East, with a growing number of projects being initiated in the region, gradually increasing China's presence and influence.

Impact on U.S. Global Interests

While the initial perception might suggest that the United States' departure from the Middle East could shift regional challenges to China and Russia, abandoning this crucial region, with its significance as both a trading corridor and a source of vast energy resources, could jeopardize U.S. global interests. China's dominance in the Middle East not only enhances its energy security but also challenges U.S. strategies in energy markets. Moreover, mutual investments between China and Middle Eastern countries bolster China's economy, a primary target of U.S. economic policies. Additionally, China's expanding presence in the Middle East could impede U.S. maritime capabilities globally, potentially weakening its position as a global power.

The Last Chance for the United States to Revert to the "Denial Oil" Policy

As the United States hesitates to completely withdraw from a region threatened by violent extremism, local power struggles, and unstable regimes, China continues to expand its influence. China's growing influence in the Middle East region has the potential to influence U.S. energy policy and foster ties between China and Middle Eastern nations that could benefit the Belt and Road Initiative. This initiative has the potential to bring China to Europe, which is literally in the backyard of the United States. Secondly, the increasing influence of China in the Middle East could potentially affect the United States' global maritime capabilities and eventually weaken the United States’ position as a global power. Hence, a return to the "Denial Oil" policy appears imperative for safeguarding U.S. interests in the region and beyond.

By Shahriar Sheikhlar for Oilprice.com

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