There is little doubt that politics in the Middle East are changing right before our very eyes, and with that shift in politics will unavoidably come a change in the policies of oil, as the two go hand in hand in the region where the Arab countries have learned since the October 1973 Arab-Israeli War that oil can be a very powerful weapon.
First among the major changes to occur in recent weeks has been the icing of relations between Saudi Arabia and the United States, two countries that for the longest time were the closest of friends in the Middle East — except perhaps for the relations that the U.S. had with Israel. Well, short of a miracle, the Saudi-U.S. love affair initiated by President Franklin D. Roosevelt and King Abdulaziz ibn Saud at the close of World War II is no longer.
The differences of opinion have been brewing for a while over a number of issues, but particularly over the issue of how to handle the civil war in Syria. Saudi Arabia expected a more aggressive approach from the U.S., especially as a reply to the use of chemical weapons by Syrian forces against rebel held areas.
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The rift between Washington and Riyadh has deteriorated to the point where the Saudi head of intelligence is now touring European capitals trying to drum up support for his views of how the war in Syria should be fought. The Saudis are willing to contribute all the petro dollars it takes to unseat President Bashar Assad of Syria but so far there has been no talk of deploying Saudi troops into those horrendous killing fields that have sprung up in Syria.
This shift in U.S.-Saudi relations is not without danger. As students of conflict resolution learn, all changes are accompanied by potential risk. The elements within the afflicted areas can either accept or reject the changes, but regardless, there is always the potential for conflict.
A major shift in U.S.-Saudi relations of that magnitude is no small achievement. It will affect not only the two countries concerned but it will have a ripple effect across the region and beyond. Saudi Arabia carries a lot of influence across the Gulf and the Middle East, and as such, it will try to use that influence to get other countries in the region to shift away from Washington.
But who are the powers that can wield enough clout to replace Washington in the Middle East? If Riyadh is looking at Brussels (i.e. Paris, London, and Berlin) it is ignoring the realities of the way things are today. The Europeans are in no way capable of replacing the Americans in taking the lead on major issues such as the war in Syria — or on any other major issues for that matter.
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The one power still strong enough and perhaps foolish enough to take the challenge would be Russia. First, it no doubt would give the Russians great satisfaction to take over a relationship as important as that of Saudi Arabia, and in the process, stick it to the Americans (in retaliation for the U.S. succeeding in winning Georgia, Poland, Armenia, Kazakhstan, the Czech Republic, Romania, and other former Soviet space counties away from Moscow).
Americans are today less dependent on Saudi oil than they used to be and perhaps that would be the needed push to convince Americans to develop their own oil fields in the West and Mid-West United States. Perhaps China would jump in the game as Beijing is forever eager to acquire new sources to fill its ever increasing appetite for oil.
Here’s how the major U.S. equity markets traded on Monday:
Originally written for OilPrice.com, a website that focuses on news and analysis on topics of alternative energy, geopolitics, and oil and gas. OilPrice.com is written for an educated audience that includes investors, fund managers, resource bankers, traders, and energy market professionals around the world.
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