An oil threat, but Saudi Arabia less fearsome than it used to be

Why We Wrote This

Amid furor over the disappearance and alleged murder of journalist Jamal Khashoggi, Saudi Arabia gave a verbal reminder of its power over oil markets. But using that weapon could hurt the kingdom itself the most. 

Ahmed Jadallah/Reuters/File
Saudi Aramco's Ras Tanura oil refinery and oil terminal is seen in Saudi Arabia, in May.

Saudi Arabia dredged up memories of its 1970s oil embargo recently, with an Oct. 14 threat that it may use oil as a weapon of retaliation to any US response over the apparent torture and killing of a Saudi journalist who wrote for The Washington Post. Pressure has been building for such a US response. And on Thursday Treasury Secretary Steven Mnuchin said he no longer planned to attend an investment conference in Saudi Arabia. It’s unclear if the Trump administration will take any action. But, if it did, could Saudi Arabia revive oil as a weapon? It’s technically possible. The world’s top oil-exporting nation has influence over global prices. Yet many analysts don’t see it as likely. If Crown Prince Mohammed bin Salman restricted Saudi exports, his nation would suffer a blow to its recent reputation as a stabilizing force in global energy markets. Also, reduced oil supply would give other nations fresh impetus to diversify toward renewable and other energy sources. Already that’s been occurring. And remember that Iran and Saudi Arabia have a rivalry for influence in the Middle East. Iran faces a squeeze from Trump administration sanctions on its oil exports, and the Saudis “don’t want to give the US any reason to back away,” energy expert Samantha Gross says in a new podcast for the Brookings Institution. Using oil as a weapon would hurt Saudi Arabia more than it would hurt the US, she says. 

SOURCE: US Energy Information Administration; BP Statistical Review of World Energy
Karen Norris/Staff

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