Faced with international uproar and crumbling diplomatic relations over the alleged murder of journalist James Khashoggi, Saudi Arabia is playing hardball and threatening to dramatically increase oil prices if sanctions or other actions are taken against the country:
In a column published just after the SPA statement, Saudi-owned Al Arabiya channel’s General Manager Turki Aldakhil warned that imposing sanctions on the world’s largest oil exporter could spark global economic disaster.
“It would lead to Saudi Arabia’s failure to commit to producing 7.5 million barrels. If the price of oil reaching $80 angered President Trump, no one should rule out the price jumping to $100, or $200, or even double that figure,” he wrote.
First, it’s important to note that this is mostly an empty threat from the Saudis for many reasons. The kingdom was the ringleader in massively boosting production to slash oil prices for many years this decade in order to put other oil producers out of business. Much to the dismay of environmental and climate advocates, fracking, shale oil exploitation and other forms of energy production have grown cheaper and more widespread, with the result that there has been a significant shift in the oil production industry to North America. The Saudis were keen to make it as difficult as possible for the production of more difficult to reach, dirtier oil to be profitable, so they glutted the market with their sweeter, more easily reachable crude. The Saudis could certainly cut back on production and raise the price of oil, but it would only accelerate the same development by their competitors on the world market that they have been so keen to halt.
Second, Saudi Arabia sits in a precarious position on the world stage at the moment. Despite the re-implementation of sanctions and the Trump administration’s stupid scuttling of the U.S.-Iran deal, Iran, and the Shi’ites are in a stronger position in the Middle East than they have been in some time. The Shi’ite majority in Iraq is empowered and allied with them, and Iranian backed interests are prominent in Syria, Lebanon, and elsewhere.
The Saudi’s intervention in the Yemeni civil war–which is backed by U.S. weapons–is currently the worst man-made humanitarian crisis on the planet. And the United States is helping the wrong side. Saudi Arabia is indiscriminately bombing civilians, including children, in large part to push back on what it considers to be Iranian-supported interests on its border. On Sunday, Senator Bernie Sanders rightly called on the U.S. to get out of the Yemen conflict and re-evaluate the relationship with Saudi Arabia. The Saudis are hardly in a position to be dictating terms to anyone, lest the Iranians be seen as a more reliable and powerful partner for peace and progress in the region over time, particularly given the negative global impact of the violent and virulent strain of Wahhabism in the Kingdom. After all, neither ISIS nor the 9/11 terrorists were Shi’ite.
Yet by far the most important context for this uproar is climate change. It’s tiresome to repeat the same apocalyptic warnings, but we really are barreling headlong into a massive, civilization-threatening crisis with unimaginably devastating and unpredictable compounding impacts. Famines, unprecedented natural disasters, epidemics, economic depression, and the concomitant wars that inevitably follow all such things are now likelier than not unless dramatic action is taken to reduce carbon emissions.
The world has frankly had the capacity to do far, far more to reduce emissions without harmful economic consequences by shifting the incentives from fossil-fuel production to conservation and development of renewables. One of the many reasons that humanity has not moved remotely as quickly as it should have is the political power of fossil-fuel producers, and the easy availability of cheap oil. If oil were more reasonably expensive, it might have a minor short-term drag effect on economic growth, but it would also encourage much more rapid and widespread adoption of renewable alternatives and conservation systems. These would not only reduce the negative impacts of the climate crisis, but have profound benefits to human health, the environment, and the sustainability of ecosystems in ways that are far more beneficial to the economy over time.
It’s time the world called Saudi Arabia’s bluff and ended its co-dependent relationship with the repressive Kingdom. The stability of the House of Saud is far too politically precarious for them to follow through on any serious threats to economic disruption; the United States involvement in the war in Yemen is a moral abomination; and frankly reduced oil production from the Saudis would be important in pushing the world’s developed nations to more quickly implement climate mitigation policies.
This is a win-win situation for everyone, except the House of Saud.