Home/ Opinion / Views/  Mint Explainer: Why the US is at odds with its friends in West Asia

The Biden Administration has directed its ire at the Middle East. Faced with sky-high energy prices and looming midterm elections, President Biden turned to oil giants like Saudi Arabia and the UAE to secure low prices for oil. However, Riyadh and Abu Dhabi have instead backed cuts in oil production, which will send prices upwards. Mint explains the latest drama from the Middle East.

What is the background to the issue?

Energy prices have skyrocketed over the last year due to a few key factors. First, the sharp economic recovery after the pandemic spurred demand for energy as national economies began to open up. This was soon exacerbated by the war in Ukraine. The uncertainty caused by the war and the sanctions on Russian oil played a part in causing prices to rise sharply. Brent crude closed out 2020 at $51 a barrel while another index, the West Texas Intermediate, was at $48 a barrel. In October 2022, Brent Crude was at $94 dollars while the WTI stood at $88.66 dollars. This is also fuelling inflation in numerous economies like India and the US. Biden is slated to face a tough midterm election battle. High inflation and energy prices will undercut his popularity.

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How does the Middle East play into Biden’s plans?

Regional partners like Saudi Arabia and the UAE are important players in oil production cartels like OPEC. In July, Biden went to Riyadh and met Saudi Arabia’s Crown Prince Mohammed Bin Salman. Although Biden once vowed to make the Kingdom “a pariah" after the killing of journalist Jamal Khashoggi, he was forced to go to Riyadh to enlist Saudi Arabia’s cooperation. Washington hoped that the country would help boost oil production and help decrease oil prices. However, at the recent conference of OPEC+ at Vienna, the group decided to slash oil production by 2 million barrels a day. The group claims that the decision is aimed to stabilise oil prices amidst great uncertainty.

What does the decision imply?

Saudi Arabia and the UAE have effectively acted to boost the price of oil, which has been declining in the recent past. According to some experts, these Middle Eastern countries will require the additional resources from higher oil prices for a slew of development and infrastructure projects. However, it will also benefit Russia, a member of the OPEC+ cartel, which desperately needs funds to prosecute its war in Ukraine. Given that this decision will benefit Russia and damage American efforts to stem an inflationary tide back home, it has been interpreted as a snub for the Biden Administration. This was also a personal loss to the President as he had placed a good deal of political capital on his earlier outreach to Saudi Arabia. It has, however, been reported that the US attempted to delay OPEC’s decision apparently to no avail.

How has Washington reacted?

Washington’s political leadership and national security elite are up in arms about OPEC’s decision. The White House’s press secretary accused OPEC of backing Russia. The spokesperson of the State Department said that the Biden Administration was preparing to review its relationship with Saudi Arabia in particular. President Biden himself stated that he was “disappointed" with OPEC’s decision.

Senior politicians have been more vocal and have called for serious consequences for Riyadh. One suggestion is to temporarily halt the sale of arms to Saudi Arabia, which depends on Washington to meet many of its security needs. Legislators in the House of Representatives were even more outspoken and called OPEC’s move a “hostile act". Some have called for Washington to withdraw its military backing for Saudi Arabia and the UAE.

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Updated: 13 Oct 2022, 04:16 PM IST
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