Was Trump’s call about oil with Saudi leader the start of a reset in relations?

US-Saudi partnership faces both old and new challenges in post-COVID-19 Middle East.

al-monitor US President Donald Trump meets with Saudi Deputy Crown Prince and Minister of Defense Mohammed bin Salman in the Oval Office of the White House in Washington, US, March 14, 2017.  Photo by REUTERS/Kevin Lamarque.

May 1, 2020

As the US energy industry got hammered by both the impact of COVID-19 on global demand and a Russia-Saudi oil war, US President Donald Trump lit up the phones, making clear to both Russian President Vladimir Putin and Saudi Crown Prince Mohammed bin Salman (known by his initials “MBS”) that they had to stop the free fall in prices.

In an April 2 call, according to Reuters, Trump warned MBS that unless the Organization of the Petroleum Exporting Countries (OPEC) cut back on production, he might not be able to stop congressional legislation calling for the withdrawal of US forces from the kingdom.

Ten days later, Russia and OPEC cut production.

This all can probably be scored as both a win for US presidential diplomacy and a sign of the enduring centrality of Saudi Arabia in US energy and security policy, as the partnership enters a new, post-COVID-19 era. 

Trump and MBS finish what Putin started

The oil price collapse and the COVID-19 crisis are linked at the start, as Daniel Yergin explains in Foreign Affairs. When China’s economy began to shut down in January and February with the early outbreaks of COVID-19, global demand for oil dropped by 6 million barrels per day. In March, Saudi Arabia proposed dramatic cuts in production to maintain price stability; Russia wanted to keep the previous OPEC+ agreement in place. They couldn’t agree, and both sides cranked up production. Prices fell from $56 per barrel in February to approximately $23 per barrel this past week — the lowest monthly average in years.

Putin also had his sights on dealing the US energy and fracking industry a setback. The United States had become a net energy exporter in 2019, but the decline in both demand and prices set back US energy production from its apex. The Energy Information Agency predicted the United States would be a net importer again in 2020.

Trump, who in principle welcomed low oil and gasoline prices, especially in a down economy, rallied to action following a revolt by Senate Republicans from oil-producing states, who were now willing to join anti-Saudi legislation unless the kingdom stopped the price war. 

That led to Trump’s call with MBS (as well as a flurry of calls with Putin), a new OPEC deal and at least a slowdown in the free fall in prices.

Karen Young explains here that the new OPEC+ deal to end the price war was essential, but it alone can’t resurrect demand or eliminate excess supply during a global recession that the International Monetary Fund has termed the "great lockdown."   And there may be a role for cheap oil to help get the economy started again.

Putin may have gotten in over his head by taking on the kingdom in an oil war. In the rush both to preserve market share and ding the US energy industry, the price war with Saudi dropped the cost of oil production below the $42 per barrel break-even point for Russia. The new deal involved more of a cut than could have probably been agreed upon with the kingdom in early March.  As Maxim Suchkov explains, some key figures in Russia questioned Putin’s course and considered it a win for Trump and MBS.

Managing differences

Over more than seven decades, the US-Saudi partnership has at times involved managing different approaches — on oil prices, Iraq, the Israeli-Palestinian peace process, human rights, etc. — to chart a course that works for both sides, or at a minimum manages differences and diminishes the risk of conflict.

The murder of Jamal Khashoggi set back the kingdom’s ties with members of Congress, the media, and nongovernmental organizations that have been critical of its human rights record. Saudi Arabia, along with Iran and Syria, also just received the lowest score in the region in the latest annual report of the US Commission on International Religious Freedom.    

It is worth noting, however, that the kingdom last month abolished flogging as a criminal punishment, and while many draconian penalties remain on the books, they are much less frequently enforced than in the past.

The Trump administration is also not taking sides in the Saudi-UAE-Egypt-Bahrain dispute with Qatar, which hosts the regional headquarters for US Central Command. Trump has developed his own strong relationship with Sheikh Tamim bin Hamad Al Thani, the emir of Qatar. Washington’s interest is that they all bury the hatchet. There are some occasional signs of a thaw. For now, it seems to be a cold peace, and the business of the Gulf Cooperation Council on security matters proceeds, if mostly at the working level.

Setting the agenda

Despite these differences, a daunting agenda for the coming years requires even deeper cooperation: on energy prices, following a global recession; counterterrorism, to combat a comeback of al-Qaeda and the Islamic State; Israeli-Palestinian issues, with the threat of Israeli annexation of parts of the West Bank; Iran; and many more. 

Before the COVID-19 pandemic the World Bank warned that fragile and conflict states in the region — Libya, Syria, Yemen, Iraq, Lebanon and the West Bank/Gaza — faced endemic instability and crisis. Those dire projections just got a lot worse with coronavirus and low oil prices. US and Western donors will be tapped out for the foreseeable future, and Gulf oil producers also face economic uncertainty. But these fragile and conflict states will need regional diplomatic and economic support to have a chance at post-conflict stability and growth, and to avoid becoming failed states and havens for terrorists. 

It's hard to imagine any of these issues being managed without close and intense US-Saudi cooperation, working with other regional partners. 

MBS, in some ways, is still learning on the job. He is just 34 and has been crown prince for only three years. The kingdom’s Vision 2030 is no PR stunt; visitors attest to dramatic changes. He has pushed advocates of radical Islam to the margins. Criticized for its conduct and targeting during the war in Yemen, the Saudi-led coalition is on a diplomatic surge, recently extending a cease-fire to back UN-brokered diplomacy. 

The crown prince prefers to buy American, rather than Russian or Chinese. There are voices in the kingdom, and throughout the Gulf, advocating a turn east, toward Beijing, as an alternative to the United States. That does not seem to be the inclination of MBS, and it’s probably in Washington’s interest to keep him closer to the American and Western orbit. 

There may be times in the future when the United States will need to call out the kingdom and put the relationship on the line, as Trump reportedly did last month. Sometimes friends and partners need to go the mat, if required. But the relationship matters. Given the daunting challenges the region faces in the coming years, the United States doesn’t need a Saudi problem to add to them.

Continue reading this article by registering at no cost and get unlimited access to:
  • Al-Monitor Archives
  • The Week in Review
  • Exclusive Events
  • Invitation-only Briefings