What is happening in the petroleum arena nowadays in terms of disparity in thinking and decision-making between oil producers and consumers calls for some observations:
First: the oil policy in Saudi Arabia is determined primarily by the Kingdom's national interest, and secondly by its relationship with the world. Thus, it is not a novelty that characterizes our contemporary world and is in full alignment with the Charter of the United Nations.
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Second: this petroleum policy that we coordinate with the remaining OPEC member states and other oil-producing and exporting countries may agree with the interests of some countries at times and conflict with them other times. Not long ago, we saw former US President Donald Trump at the White House thanking OPEC+ for its historic decision to cut output to 9.7 million barrels per day, which saved the American petroleum industry at that time. Now, we see President Biden heading toward tapping into the strategic oil reserves and scowling at the stance of OPEC+, which upholds the increase set by the group.
Third: Saudi Arabia's petroleum policy is based on the principles defined in the opening articles of the OPEC Charter, the most important of which are: securing supplies to consumption areas, protecting the interests of oil-rich nations, and ensuring market stability. I repeat that securing supplies was mentioned in the first ever official document to be issued by oil-exporting countries and not by oil-importing countries. in fact, what the Kingdom and its partners did in April 2020 went beyond what we refer to as “securing supplies.”
These observations and their underlying foundations for a well-defined policy may not be as clear to some of our friends.
I went back to some clippings I had saved and found some excerpts from foreign newspapers, which I wish to present to the esteemed readers.
On September 28, 2016, London-based Financial Times published an article by Dr. Nick Butler, a professor at King's College London and then-special advisor to British PM Gordon Brown, titled: “The Saudis are playing with fire if they raise oil output further.” The article’s bottom line is that the Saudis should reduce their production to make room for US shale oil to secure its market share!
This article, written by a professor who lectures at a prestigious university, was countered by another professor who is very popular among students of economics and politics, Dr. Jeffrey Sachs, director of the Earth Institute at Columbia University in the United States at the time. Sachs is a free thinker, a venerable advocate of sustainable development, and a fierce fighter against global poverty.
Sachs wrote a letter in response to Butler's article that was published by the same newspaper on November 30, 2016. Sachs’ letter said: “I hope that the Saudis ignore this advice, which fails on several grounds. […] It makes no sense to cut back on $5-$10 per barrel marginal cost Saudi oil to make room for $40-$60 per barrel US fracking oil.”
The only comment I can say about this response by Prof. Sachs is that it is a perfect example of the strong morals that we can luckily still find in some scholars who really care about justice in our modern world.
Prof. Sachs also refuted what Prof. Butler said about the impact of a Saudi output increase on US petroleum industry unemployment levels, pointing out that “the entire employment of specialised oil, gas, and coal workers probably totals no more than 0.1 per cent of the US labour force.”
The conclusion is that our foreign friends are mistaken. In fact, they lack wisdom and foresight in their attempts to explain our positions, as they often see us as a silent variable with no role in decision-making.
I conclude with what puzzled me as I reread the statement issued by the G20 Summit in Rome, which stressed in one of its paragraphs the importance of consultation through the World Energy Forum (based in Riyadh) in order to ensure stability, transparency, and efficiency for energy markets. Like me, readers may wonder about the fate of this and other unanimously issued statements.
This article was originally published in, and translated from, pan-Arab daily Asharq al-Awsat.
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