The three largest oil producers, Saudi Arabia, Qatar and the United Arab Emirates (U.A.E.), did not make concessions to the United States, which demanded lower oil prices by increasing production volumes. Europeans and Americans are trying to get them to increase production while Russian exports are below pre-war levels in Ukraine. These Gulf states see new opportunities for themselves and the region in the current situation.
Higher oil prices benefit the producers
The oil producers have referred to the commitment of OPEC + 1, an expanded version of the oil cartel, which includes Russia. They explain that the situation in Ukraine has not yet led to massive disruptions in oil supplies; therefore, there is no need to increase production.
However, experts believe this is a political decision, reflecting a significant shift in world politics. The choice to maintain high prices, which also benefits Russia, shows that the Persian Gulf no longer needs U.S. approval and makes new alliances with like-minded people.
In the past, the Saudi rulers have increased or decreased oil production several times to please U.S. allies. Saudi and U.A.E. now have more than 3 million barrels a day of spare capacity and could lower oil prices even if they released some of their oil reserves.
The Saudis have too much leverage for their opinion to be taken into account in geopolitics and stop criticizing for human rights violations.
U.S. President Joe Biden and European Commission President Ursula von der Leyen on March 24 discussed the creation of a working group to reduce Europe’s dependence on Russian gas and oil. The corresponding statement appeared on the same day on the website of the White House.
Also, on March 24, the G7 countries called on OPEC and other oil and gas producers to increase supply in the world market to reduce dependence on Russia. In addition, they agreed to coordinate steps to prevent circumvention of sanctions against the Russian Federation, including concerning the operations of the Russian Central Bank with gold.
The day before, Russian President Vladimir Putin, at a meeting with the government, said that the country would switch to paying for gas supplies to unfriendly states in rubles soon.
Questioning U.S. role in Middle East Conflicts vs Ukraine
Qatar and Saudi Arabia on Saturday regretted the West not paying as much attention to conflicts in the Middle East as to Ukraine. The oil and gas-rich Gulf states, which are close to the West and Russia, have not taken a firm stand against Moscow but do not support its invasion of Ukraine.
“The humanitarian suffering we see in Ukraine … has existed in many countries in the region for years,” said Qatari Foreign Minister Mohammed bin Abdulrahman al-Thani comparing the war in Ukraine to that in Syria, where the Russians support the regime of Bashar al-Assad by military means.
During the forum, the Saudi foreign minister agreed with his Qatari counterpart. “The international community’s commitment to Ukraine is” quite different “from that of the Middle East,” said Faisal bin Farhan al-Saud. “You need to have a better dialogue with the rest of the international community,” he told U.S. and European officials present. To the excuse Ukraine is “quite different” from the Middle East, Faisal bin Farhan Al Saud said, “You need to have a better dialogue with the rest of the international community,” he told U.S. and European officials present.
Gulf States sent British PM empty handed
This month, British Prime Minister Boris Johnson, following talks with Saudi Arabia and the U.A.E., failed to earn public promises to increase oil production. The trip of the head of the British government to Abu Dhabi and Riyadh was aimed to increase oil reserves.
At the Abu Dhabi meeting, Johnson’s office said he stressed the need to work together to stabilize energy markets. Following the talks in Riyadh, the British Prime Minister, answering whether Saudi Arabia would increase production, forwarded the question to the Saudi side.
Before the meeting, Johnson said that “the world must get rid of Russian hydrocarbons,” and Saudi Arabia and the U.A.E. can become key international partners in realizing such intentions. So far, both countries have resisted U.S. proposals to increase production: the measures were designed to tame the rise in oil prices, threatening a global recession.