Americans had every right last month to greet the 40th anniversary of the Arab oil embargo with boasts about surging production of oil and gas and about correspondingly diminished reliance by the US on supply from abroad. Those are major achievements. New supply from unconventional resources heralds the biggest changes in markets for fluid hydrocarbons since those inaugurated by the embargo. The changes can be very good for the US. But they won't disengage US interests from what some Americans still see as a symbol of antagonism from four decades ago: Saudi Arabia.
The kingdom is vitally and nowadays constructively important to energy markets. And its normally circumspect leaders are suddenly, outwardly angry. The day after their nation won election to a nonpermanent seat on the United Nations Security Council, Saudi officials on Oct. 18 rejected the position. The move was unprecedented. In a statement criticizing the Security Council for "double standards," the Saudi Ministry of Foreign Affairs expressed displeasure over continuation of the Israeli-Palestinian conflict, failure to make the Middle East "a free zone of all weapons of mass destruction," and lack of response to the use of chemical weapons in Syria by the government of President Bashar Al-Assad. Saudi Arabia, the statement said, won't accept membership until reform makes the Security Council able "to carry out its duties and responsibilities in maintaining international peace and security."
Saudi worries
Motives are clear. The Sunni kingdom worries about expansionism by Shia Iran, manifest in Iranian mischief in Iraq, Syria, and Lebanon. An Iran with nuclear weapons is a Saudi nightmare. Indeed, Saudi Arabia has threatened to seek its own nuclear capability if the Islamic Republic succeeds with the covert weapons program it is widely thought to have under way but persistently denies.
Perhaps worse from the Saudi perspective, the kingdom's longtime protector seems to have gone adrift. The US first backed away from President Barack Obama's threat to respond militarily to the Syrian regime's deployment of chemical weapons against civilians. It then became willing to swap niceties with a new Iranian president seemingly less truculent, though no more powerful, than his predecessor. Saudi Arabia has reason to feel threatened by US wavering in its perilous neighborhood. It's no small irony that Israel expresses identical worry about Iran.
The temptation might be great to think Saudi Arabia matters less to the US than it did before American imports of crude oil began to fall. In fact, Saudi Arabia matters as much to the US as ever because it remains a vitally important source of oil in international trade, which is of course vitally important to global manufacturing and commerce. The importance to any one country relates little to how much oil that country imports from Saudi Arabia or how much it imports in general.
Current conditions in the oil market underscore the point. A 2.5-million b/d increase in US production of crude oil and lease condensate since 2007, to nearly 7.5 million b/d in July, is often credited with keeping oil prices in reasonable check despite output declines this year in Libya, Iraq, Iran, Egypt, and other trouble spots. To be sure, the new supply helped compensate for those losses. But so did elevated production of crude oil by Saudi Arabia, which has exceeded 10 million b/d the past 3 months. Without the extra Saudi output, crude prices would be higher worldwide.
Oil price influence
As a premier supplier of oil committed to holding production capacity in reserve to buffer supply shocks, Saudi Arabia exerts a strong and moderating influence on oil prices. It remains important to all industrial countries, no matter how much oil they import or from whom.
The US does not need to follow the Saudi lead in geopolitics. It shouldn't. The countries have their differences. The US does need to acknowledge the kingdom's continuing relevance in global affairs—and the importance Saudi leaders ascribe to American resolve in the Middle East.
