Summary
DUBAI, March 3 (Reuters) - Saudi Arabia's crown prince says he simply doesn't care whether Joe Biden misunderstands him. The prince is instead looking to his oil power to deliver his goals, according to sources familiar with Riyadh's thinking: recognition from the American president that he's the real ruler of the kingdom and a stronger hand in the costly Yemen war. That's one reason why Crown Prince Mohammed bin Salman is resisting U.S. pressure to pump more crude to lower the price of oil that has surged since Russia attacked Ukraine, besides keeping Riyadh's oil pact with Moscow alive, the sources said.
"The Saudis have demands too, before they meet any of the U.S. requests. The Yemen file and the recognition of the crown prince as the de facto ruler are on top of these," one of the sources familiar with Saudi government thinking told Reuters. Traditionally strong ties between Riyadh and Washington were shaken when Biden released a U.S. intelligence report implicating Prince Mohammed in the 2018 murder of journalist Jamal Khashoggi and ended U.S. support for offensive operations in Riyadh's costly war against Iran-aligned Houthis in Yemen.
So far, Biden has refused to speak to Prince Mohammed directly, saying 86-year-old King Salman is his counterpart - even though the young prince effectively runs the kingdom and had a close relationship with Biden's predecessor Donald Trump. In an interview with The Atlantic published on Thursday, Prince Mohammed said his aim was to strengthen Riyadh's long, historical relationship with Washington, but he was not concerned about whether Biden misunderstood him.
"Simply, I do not care," the crown prince was quoted as saying. "It's up to him to think about the interests of America." The Saudi authorities did not respond to Reuters requests for comment. Prince Mohammed, who is known as MbS, denies any involvement in Khashoggi's death. Riyadh has repeatedly stressed the strength of its strategic partnership with the United States and that its oil policy is based on a commitment to market stability and supply security driven by market fundamentals.
ONLY CARD TO PLAY
The Organization of the Petroleum Exporting Countries (OPEC) and its allies led by Russia have been unwinding historic output cuts they instated in 2020 to boost prices after the coronavirus pandemic caused an unprecedented fall in global demand. But since Russian troops moved into Ukraine last week and the West hit Moscow with stringent sanctions, oil prices have surged to the highest since 2012 on concerns about disruptions to supply, with little global spare capacity to pump more crude.
Washington would like the producer alliance, known as OPEC+, to increase output faster than it has been doing since August but only a few countries have spare capacity, including de facto OPEC leader Saudi Arabia and the United Arab Emirates (UAE). The U.S. State Department's special envoy for energy affairs, Amos Hochstein, flew to Riyadh last month for talks about managing the potential impact on oil markets if Russia were to invade Ukraine - which it did a week later.
"MbS's only card is oil policy to press the Americans to give him what he wants, which is recognition and weapons for Yemen," said a second source familiar with Saudi thinking. On Wednesday, the OPEC+ alliance stuck to its long-standing plans for gradual increases in output of 400,000 barrels per day each month, rather than boosting supply faster.
"Saudi Arabia ... has sought not to be seen acting against Russian interests. In doing so, the kingdom could kill two birds with one stone: keep the door open to Moscow and give President Joe Biden some payback for his refusal to engage with Crown Prince Mohammed bin Salman," wrote James Dorsey, a senior fellow at National University of Singapore's Middle East Institute.
In a sign of his eagerness to be part of the conversation with Washington, Prince Mohammed canceled a trip to China for the Winter Olympics to ensure he was at his father's side when Biden called King Salman bin Abdulaziz on Feb. 9, three sources told Reuters.
In the call, which covered energy, Iran and Yemen, the king spoke about maintaining market stability and emphasised the need to maintain the OPEC+ pact, state media said. "The situation is still as is - counterpart to counterpart - but given how the U.S. is in a difficult situation now, they might compromise," said one Riyadh-based diplomat, adding that Prince Mohammed wanted official U.S. recognition and Washington's support in Riyadh's seven-year Yemen campaign.
Asked for comment, a U.S. State Department spokesperson said: "While energy and security issues are important policy considerations for both countries, we will not discuss the details of our private diplomatic engagements." "As we have noted publicly, we have held discussions with Saudi Arabia on a collaborative approach to managing potential market pressures stemming from Russia's invasion of Ukraine."
TRYING TO STAY NEUTRAL
The sources and analysts said Saudi Arabia and other Gulf states could not afford to remain neutral between their Western allies and Russia for long, and would ultimately choose the region's security guarantor America - especially given the risk of secondary sanctions over Ukraine. But for now, Riyadh and other Gulf oil producers may get away with a neutral stance that allows OPEC+ to continue to function, a senior oil industry source said.
The last time the producer's pact unraveled, Riyadh and Moscow became embroiled in a price war and all-out battle for market share that caused oil prices to plummet, ultimately hurting OPEC and U.S. oil producers alike. Other OPEC producers also say the surge in prices is being driven by geopolitical tension, rather than market fundamentals, and the potential return of Iran to the market, if a deal is reached to revive its nuclear agreement, needs to be taken into account when determining oil output levels.
"The feedback that we got from the Saudis is that they see the OPEC+ agreement with Russia as a long-term commitment and they are not ready yet to endanger that cooperation ... while making it clear that they stand with the West when it comes to security cooperation," said a Western diplomat in Riyadh. "They are trying to stay neutral as far as possible, but now that (Russian President Vladimir) Putin has gone for a full invasion, they may no longer have that luxury."
WITH US OR AGAINST US
Gulf states also have business and geopolitical interests with Russia, whose president stood by the crown prince when Western leaders shunned him in the uproar over Khashoggi's killing at the kingdom's consulate in Istanbul. But it was the West that sent troops to liberate Kuwait in the 1990-1991 Gulf War and defended Riyadh when late Iraqi President Saddam Hussein invaded Kuwait.
And Riyadh and other Gulf states still rely on the American security umbrella even as they move to diversify defence partners due to a perception that U.S. commitment is waning. "The United States is committed to advancing Saudi defenses," the U.S. State Department spokesperson said. "We also have a robust dialogue on helping Saudi Arabia improve its ability to defend its territory against security threats from Yemen and elsewhere in the region."
Dorsey said the problem for Gulf leaders was that Ukraine could potentially open a Pandora's Box in which major powers either side of the divide invoke former U.S. President George W. Bush's post 9/11 maxim: "You're either with us or against us." In The Atlantic article, the crown prince hinted that if relations were to sour with Washington, others countries such as China would be more than ready to step in. "Where is the potential in the world today?" he said. "It's in Saudi Arabia. And if you want to miss it, I believe other people in the East are going to be super happy."
