The US ban on Russian oil and the new realities in the Middle East

On March 8, 2022 US President Joe Biden imposed a ban on imports of Russian oil, gas and energy . Said the US President, ‘This is a step we’re taking to inflict further pain on Putin’. Biden also said that Americans may have to deal with the economic repercussions of this tough decision for sometime. Gas prices in the US had touched well over $4 (4.17) a gallon, which was higher than the previous record set in 2008, before the announcement.

Over the past few days, US has been looking for alternatives to Russian oil. Last week, a delegation of US officials visited Venezuela, and apart from the release of detained US citizens in Venezuela, the removal of sanctions was also discussed (as a goodwill gesture, two prisoners were released on Tuesday, March 8, 2022). The US delegation also met with President Nicolas Maduro

In the Middle East, the US and other countries are looking to Saudi Arabia, UAE and Iran for making up for the shortfall caused by  Iran which currently pumps over 2 million barrels per day (bpd) could raise this number significantly to 3.8 million. This would reduce global oil prices and the pressure on countries dependent. During his address, last month, to the Gas Exporting Countries Forum (GECF) held at Doha (Qatar), Raisi had said that Iran was willing to fulfil the energy needs of countries including European nations.

The Biden Administration’s decision to look at alternatives for oil supplies has drawn stinging criticism. A republican policy maker while commenting on this decision said:

   ‘The decision to explore alternative sources of oil and gas has fit would be outrageous to even consider buying oil from Iran or Venezuela. It’s preposterous that the Biden administration is even considering reviving the Iran Nuclear Deal,’

 It would be important to point out that while Iran may be an important option for the US and other countries, this would only be possible if the Iran Nuclear deal 2015 is revived, and sanctions are removed. Russia has created a major hurdle by asking for a written guarantee from the US that sanctions imposed by it will not apply to Russia’s economic linkages with Iran. The US has dismissed Russian demands and said that the sanctions imposed are not linked to the Iran deal. Apart from this, there are sections of US policy makers vehemently opposed to the deal.

If one were to look at the case of UAE and Saudi Arabia, both countries have refused to take calls of President Biden – the two Gulf countries have turned down US demands to pump more oil. Both countries also took time to vote for the UNGA resolution against Russia’s invasion of Ukraine (in recent years there economic and defense ties with Russia have improved). It is important to understand that ties between Washington and both the Gulf nations have soured for a number of reasons.

Reasons for deterioration in Saudi-US ties

If one were to look at the instance of Saudi Arabia, Washington’s ties with Riyadh have gone down hill due to a number of issues including; Washington’s withdrawal of support to the Saudi Arabian war offensive in Yemen, strained ties between Biden and Crown Prince Muhammad Bin Salman (MBS). Biden unlike Trump has refused to deal with MBS and has been speaking to MBS’ father King Salman). One of the major bones of contention has been the release of an unclassified report in 2021, which clearly points to the role of MBS in the brutal murder of  Saudi journalist Jamal Khashoggi (Trump had refused to release this report). Visa restrictions were imposed on 76 Saudi citizens involved in harassing journalists and activists, by the Biden Administration, but no such measures were announced against MBS.

 During his presidential campaign Biden had been stinging in his criticism of Saudi Arabia’s human rights record and vowed to treat Saudi Arabia as a ‘pariah’, the decision of the Biden Administration not to sanction MBS directly drew strong criticism from certain quarters within the democrats. Saudi Arabia’s growing proximity towards China has also been a bone of contention in US-Saudi relations. In December 2021, US intelligence agencies suspected that China was assisting Saudi Arabia with its development of its ballistic missiles. In a recent magazine interview, MBS said that he did not care if the US President had misunderstandings with regard to the former.

Riyadh moving closer to Beijing?

Earlier this year, in January 2022, during a meeting between Chinese Defense Minister Wei Fenghe and Saudi Deputy Defense Minister, Khalid Bin Salman there was a focus on strengthening defense ties.  Saudi Aramco and China’s North Industries Group (Norinco) have recently decided to take forward an agreement for the development of a crude oil refinery and petrochemical complex in Panjin, China. What is significant is that Norinco is also a defense contractor, and was amongst the eight Chinese companies that joined the recently held World Defense Show exhibition in Riyadh. Significantly, Saudi Advanced Communications and Electronics Systems Company (ACES) signed a strategic agreement with China Electronics Technology Group Corporation (CETC), one of the world’s largest defence companies, to manufacture drone payload systems in Saudi Arabia.

Abu-Dhabi-Washington relations

UAE’s ties with the US have also witnessed a down turn. One reason is  UAE’s blossoming relationship with China. US has been uncomfortable with Huawei being part of UAE’s 5G program and had suspected that China was developing a military facility inside the Khalifa Port close to Abu Dhabi. UAE subsequently cancelled a $ 23 billion to buy F35 jets from the US.

UAE has also been unhappy with the US decision not to designate Yemen’s Houthis as terrorists. A missile and drone attack by the rebel group, in January 2022, resulted in the death of 3 people and injuring 6. While commenting on the current state of the UAE-US relationship, UAE’s envoy to the US, Yousef al-Otaiba, said:

“Today, we’re going through a stress test, but I’m confident that we will get out of it and we will get to a better place.”

 In conclusion, while the US is looking for ways of minimising the problems caused by the ban on Russian oil and gas, it is absolutely imperative for the US to convince the Saudis and UAE to start pumping more oil, and for the revival of the Iran nuclear deal at the earliest.

Tridivesh Singh Maini
Tridivesh Singh Maini
Tridivesh Singh Maini is a New Delhi based Policy Analyst associated with The Jindal School of International Affairs, OP Jindal Global University, Sonipat, India