Flexing Its Muscles: GCC Geopolitics During the Oil Crunch
While the Biden administration may feel resentment towards Saudi Arabia, it will need to tread carefully to ensure it does not substantially jeopardize relations with Riyadh–particularly as China and Russia seek to strengthen their clout in the Gulf.
Nearly a month after OPEC+ decision to cut oil production by 2 million barrels, the fallout of the decision continues to undermine the U.S. relations with some Gulf states. OPEC+’s decision to cut oil production, in defiance of U.S. pressure, revealed how Gulf Cooperation Council (GCC) member states of the oil cartel are increasingly less shy about defying American demands to advance their own interests amid tensions surrounding Russia’s invasion of Ukraine.
U.S. President Joe Biden slammed the decision as “short-sighted,” while members of his administration accused the cartel of siding with Russia and China. Biden vowed to impose “consequences” on Saudi Arabia for teaming up with Russia to cut oil production, and his administration announced a decision to re-evaluate the relation with Riyadh.
Democratic lawmakers also called on Washington to fully suspend arms sales to Saudi Arabia as punishment. The US, like much of the world, is facing a domestic consumer crisis due to rising energy prices, and OPEC’s supply cuts have exacerbated the crisis.
Despite Washington’s criticisms, Saudi Arabia, the de facto leader of OPEC, has tried to play down accusations that it has anti-US motives. The Saudi Foreign Ministry stressed on October 13 that OPEC’s decision was based “purely on economic considerations.” Regardless of Saudi reassurances, the geopolitical fallout of their decision could be severe.
The GCC states have ostensibly sought to find a middle ground between Russia and the U.S. during the Ukraine crisis. Popular narratives have depicted Saudi Arabia and the UAE distancing itself from Washington and approaching the “East”—namely Russia and China—as the U.S. supposedly loses interest in the Middle East.
However, the U.S. is still the strongest power in the region, and security and defense ties between Washington and the GCC still run deep. Russia and China do not currently offer the same security protection that the U.S. and other Western powers like the UK and France do. In practical terms, the bloc is adapting to an increasingly multipolar world, where the rise of Russia and China on the world stage offer new prospects for cooperation in energy and other sectors.
Earlier in the war, Saudi Arabia raised output slightly to appease U.S. demands; however, the kingdom quickly reversed course and reduced oil production, raking in massive profits and benefitting Russia. Saudi Arabia may be seen as aligning with Russia because both countries benefit substantially from rising oil prices.
However, OPEC member states claim the group’s actions are more benign. Kuwait’s acting oil minister, for example, has said that the cartel seeks to stabilize oil markets by reining in excess production and striking a “balance between supply and demand.” With a global economic recession looming, GCC states have all the more incentive to keep prices high to cushion the blow from an imminent collapse in oil demand.
Therefore, the cutting is not so much about backstabbing the U.S. as it is about protecting the GCC’s economic interests and preserving the OPEC+ agreement with Russia. Furthermore, the cuts have received support from across OPEC and OPEC+, the group’s less exclusive cousin, showing it transcends GCC and Washington relations.
The GCC’s Geopolitical Clout
The damage wrought by sky-high energy prices has highlighted the world’s continued dependency on non-renewable energy. So long as this dependence persists, leading Gulf states—Saudi Arabia, Iraq, the United Arab Emirates, Kuwait, and Qatar—will continue to wield global influence. As the EU seeks to wean off Russian gas, it has turned to the GCC for help, offering the bloc another potential economic and geopolitical victory.
In September, Germany’s chancellor Olaf Scholz toured the GCC, seeking to forge new energy partnerships for Germany and the Eurozone. Scholz’s visit proved fruitful, with Berlin and Brussels securing new contracts. German utility company RWE and the Abu Dhabi National Oil Company, for example, agreed to import 137,000 cubic meters of liquefied natural gas to Germany.
Critics have pilloried Scholz and other European leaders for sidelining human rights concerns to further European energy security. Indeed, as Europe urgently acquires energy sources to replace Russian gas and ease the economic pressure on its citizens, the EU will likely warm its previously frosty tone towards GCC member states.
Adapting to a Multipolar World
In March, Saudi Arabia mulled the prospect of selling oil to China in Chinese Yuan rather than the dollar. The move indicated, among other things, that Saudi Arabia felt more secure exporting oil on its own terms, rather than working under Washington’s traditional market hegemony.
The UAE and Russia have developed a not-so-secret partnership in various geopolitical areas too. Even before the war in Ukraine, Moscow and Abu Dhabi had deepened collaboration in Syria, engaging with Bashar al-Assad’s regime amid U.S. and EU sanctions on Damascus.
That Abu Dhabi has been reluctant to denounce Moscow’s role in Ukraine since the start of the conflict, while the country has become a haven for sanctioned Russian oligarchs, shows it is not keen on succumbing to pressure from Washington amid global tensions over Ukraine. One week after the OPEC+ decision, Emirati President Sheikh Mohammad Bin Zayed visited Russia and met President Vladimir Putin. During his meeting with the Emirati president, Putin repeated previous messages issued by OPEC+; “our decisions, our action, aren’t directed against anyone,” Putin said.
The tension between Saudi Arabia and the Biden administration started in November 2019, when then-candidate Biden vowed to make Saudi Arabia “the pariah that they are.” Although Biden’s visit to Saudi Arabia in July brought confidence in the relations between Riyadh and Washington, OPEC+ decision had once again casted doubt on the relations between the two states and exposed its fragility to any diplomatic crisis. While the Biden administration may feel resentment towards Saudi Arabia, it will need to tread carefully to ensure it does not substantially jeopardize relations with Riyadh – particularly as China and Russia seek to strengthen their clout in the Gulf. In the meantime, Biden’s back-and-forth stance over Saudi Arabia—from denouncing it as a pariah state, to seeking a rapprochement with Saudi Crown Prince Mohammad bin Salman last July, and back to renewed tensions over OPEC—could exemplify Washington’s waning leverage over Riyadh.
Evidently, the needs of GCC and OPEC are transcending global geopolitical tensions. At least Saudi Arabia and the UAE will try to defy the traditional concept of a client-patron relationship, and they will continue the partnership relationship that is transactional for both Gulf states and Washington. Ultimately, the GCC’s ability to fuel Europe and maintain contacts elsewhere shows that the bloc is more willing to frustrate Washington to advance its interests.
The views and opinions expressed in this article are those of the authors and do not necessarily reflect the views of Gulf International Forum.