The petroleum industry should prepare for a future in which relations between the oil market's two behemoths differ sharply from what they were before international terrorism struck America on Sept. 11. Ever-touchy relations between Saudi Arabia and the US are under strain.
The oil market once would have quaked over diminishing friendship between the world's biggest holder of oil reserves and its biggest market for oil. It's not quaking now. Traders apparently understand that Saudi Arabia needs to sell oil as much as the US needs to buy it. To the modern market, friendship between buyers and sellers doesn't matter much.
To US companies planning Saudi investments, of course, relations between Riyadh and Washington, DC, matter greatly. Those companies will have to stay flexible. Change is everywhere.
Fragile balances
The kingdom has thrived on fragile balances unlikely to survive. Its government has played all sides of suspicions between the Muslim world and Judeo-Christian West. Externally, in the interest of oil sales and military security, it has promoted friendship with the US. Internally, it has allowed the kingdom's puritan version of Islam to become a central outlet for political dissent.
The tension is nothing new. For 3 decades, modernization financed by oil revenue has contended with the backward-leaning Muslim fundamentalism dominant in Saudi Arabia since the middle of the 18th Century. As long as oil flowed, the West has politely indulged resulting contradictions.
Recently, however, Saudi Arabia's internal pressures have intensified. The royal family can no longer afford to pamper both itself and society at large. Nonroyal Saudis feel cheated. With political options limited, they increasingly vent anger through religion. Options there are limited, too.
These pressures are now matters of direct concern to the US. That most of the suicide murderers apparently came from Saudi Arabia and acted on behalf of a group outrageously claiming Muslim legitimacy does not, of course, mean that all Saudis want to kill Americans. But there have been other disclosures that, in newly focused US eyes, make the kingdom look less than friendly.
Americans have been attacked on their own soil. They have sent sons and daughters into harm's way to avenge mass murder and prevent repetition of the outrage. They now hear complaints of Saudi foot-dragging in investigations. They grimace at the kingdom's reluctance to host US troops other than those dedicated to Saudi defense. They learn that Saudi schools, clergy, and media openly preach antagonism toward non-Muslims. They learn that Saudi funds have flowed to the Taliban thugs oppressing Afghanistan and in some instances directly into Osama bin Laden's terrorist network.
They're angry. Sensible Americans don't blame Saudi Arabia for the Sept. 11 attacks. But they no longer casually indulge the duplicity through which the royal family has preserved its authority.
The Saudis don't get it. This became obvious last month when a Saudi scion offered the mayor of New York a $10 million donation toward relief efforts then held a press conference to scold the US government for supporting Israel. He got his money back. The former US-Saudi friendship can't survive all this.
Under all imaginable circumstances, however, Saudi oil will flow. The oil industry's pet panic-sustained loss of all Saudi production-won't happen. Even if the House of Saud were to fall to fundamentalist Muslims-the panic scenario's normal and improbable premise-the oil will flow. Revolutionaries need money, too.
Change, however, is certain. But that was the case before Sept. 11. The House of Saud could not keep marching forward economically with one foot stuck in religious antiquity.
Regrettable erosion
Whatever form change takes, and however it affects Saudi oil production, the oil market will adjust. Saudi economic need bodes well for international capital committed to Saudi projects. A marketing concern looms, however. Especially while the war against terrorism persists, will US motorists buy gasoline from companies in partnership with a government they suspect of tolerating anti-American indoctrination and buying off terrorists?
Erosion of US-Saudi friendship is something to regret. The countries and their cultures have much, beyond oil and dollars, to offer one another. But the world has changed. The US has changed. It's Saudi Arabia's turn.
