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Pentagon Papers Show Saudi Arabia, U.S. Traded Threats Over Oil

Newly leaked Pentagon papers showed that Saudi Arabia's Crown Prince Mohammed bin Salmon threatened the United States with economic calamity over oil production decisions, according to the Washington Post.

Relations between U.S. President Biden and Saudi Arabia's bin Salman have been sour since before President Biden took office, with the latter threatening to make bin Salman a pariah. But newly leaked Pentagon documents suggested that Saudi Arabia's decision to cut production last October started a whole level of chilly for the duo’s relationship.

Following Saudi Arabia's decision to cut oil production along with fellow OPEC+ members, President Biden—battling inflation at home and fearing production cuts would worsen the situation—had promised OPEC+ that there would be "consequences".

"I am in the process, when the House and Senate gets back, they're going to have to – there's going to be some consequences for what they've done with Russia," President Biden told CNN's Jake Tapper last October.

In response to President Biden's threat, the documents show that HRH threatened the United States with "major economic consequences."

Bin Salman said he would "not deal with the US administration anymore," according to the document, adding that there would be "major economic consequences for Washington." 

It is unclear whether these comments were made directly to a US official or whether it was merely an intercepted conversation.

Saudi Arabia again moved to cut production as recently as last week—this time volunteering to cut an additional 1 million barrels per day from its already reduced production targets. The move would normally raise the hackles of the U.S. Administration, which already seems to have a bone to pick with Mohammad bin Salman over what the U.S. considers to be his role in the killing of Saudi dissident Jamal Khashoggi. But oil prices failed to elevate and stay that way following the cut, diminishing the likelihood of any meaningful U.S. response.

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By Julianne Geiger for Oilprice.com

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  • Mamdouh Salameh on June 10 2023 said:
    The days when Saudi Arabia did the United States’ bidding, quenched its thirst for oil and financed its wars and military adventures and also the days when the US could dictate to Saudi Arabia have gone hopefully for ever.

    The leaked Pentagon Papers showing that Saudi Arabia and the United States traded threats over oil policies depict the level of deterioration in the relations between them and the fact that Saudi Arabia under its young and energetic leader Saudi Crown Prince Mohammed bin Salman will no longer bend the knee to the US and if threatened, it can retaliate threatening the US with major economic consequences. And believe me, Saudi Arabia does indeed have the means to do it.

    Since becoming Crown Prince, Prince Mohammed bin Salman has been distancing his country from the United States’ sphere of influence and tilting towards the China-Russia axis.

    This is demonstrated by his refusal to increase crude oil production at the requests of both former President Trump and President Biden, the landmark visit of China’s President Xi Jinping to Riyadh in December 2022 and his meeting with the heads of States of the Gulf Cooperation Council (GCC) countries and demanding that they accept the petro-yuan as payment for GCC oil exports to China. It is also manifested by China’s brokering in Beijing a deal for the resumption of diplomatic relations between arch enemies Saudi Arabia and Iran and Saudi Arabia’s public announcement that its cabinet had approved a plan to join the Shanghai Cooperation Organization (SCO) as a ‘dialogue partner’. Other than being the biggest single landmass on Earth and accounting for 40% of the world’s population and 35% of global GDP based on purchasing power parity (PPP), the SCO is a firm believer in a new World Order based on a multipolar system.

    Short of plotting a coup d’etat to remove Prince Mohammed bin Salman or arrange his elimination both acts of which of wouldn’t change the dynamics between the two countries, the United States could invoke the NOPEC Bill and sue Saudi-led OPEC for so-called cartel like manipulations of the market. But Saudi Arabia and OPEC have the ultimate weapon of immediately adopting the petro-yuan.

    Such a move could cost the petrodollar the loss of at least 22% of its share in the global oil trade. And if China’s almost 13.0 mbd of crude imports are paid for by the petro-yuan, Russia’s 8.0 mbd crude exports sold in ruble and India’s 5.0 mbd crude imports paid for in rupee are added, the US could lose 60% of its share leading to a devaluation of the US dollar by one third to half of its value.

    The United States is in big trouble, short term and long term. Its economy is bedevilled by high inflation, debt is exploding and GDP is shrinking. These are not temporary crises. Instead, they reveal systemic flaws in the American economy that is propped up by a rigged global financial system. However, that system is starting to crumble and the primacy of US dollar is in serious trouble. Don’t believe the nonsense that the US can keep printing infinite amount of dollars.

    Dr Mamdouh G Salameh
    International Oil Economist
    Global Energy Expert

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