[Choi Ji-woong's Energy War] What the U.S. Wants vs What Saudi Arabia Wants

Two Countries Entangled with Oil, Dollar, and Weapons
Relations Worsen Due to Recent Oil Production Cuts
Interest in Whether a Smooth Solution Will Be Found

Jiwung Choi, Researcher at Korea National Oil Corporation Smart Data Center

The relationship between the United States and Saudi Arabia is often compared to a 'marriage.' The two countries are mutually indispensable allies. However, an alliance implies a transaction. In international relations, there is no one-sided benefit. The relationship between the two countries is intertwined with oil, dollars, and weapons.

The core reason the U.S. intervenes in the Middle East is that the region is at the center of the global oil supply chain. Currently, the U.S. produces more oil than Saudi Arabia, but Saudi Arabia overwhelmingly surpasses the U.S. in export volume. As the world's largest oil supplier, Saudi Arabia trading oil in dollars is a major pillar in maintaining the dollar's status.

From Saudi Arabia's perspective, the U.S. is an absolutely necessary presence. Since the founding of the Kingdom of Saudi Arabia in 1932, the country's primary concerns have been national security and regime maintenance. When thinking of the Saudi royal family, it is easy to perceive the monarchy as a stable and powerful system due to the royal family's authoritative image and the wealthy impression of oil money. However, domestically, Saudi Arabia has long struggled to maintain an absolute monarchy, and externally, it has had to confront threats from Shia countries as the representative Sunni state.

Saudi Arabia's greatest threat is the Shia hegemon Iran. Iran's population is more than twice that of Saudi Arabia, and Iran also surpasses Saudi Arabia in military strength. Moreover, Iran is attempting to acquire nuclear weapons. On Saudi Arabia's southern border, the Houthi rebels, supported by Iran, pose a threat. Due to this situation in the Middle East, Saudi Arabia needs to overcome its military disadvantage through an alliance with the U.S. In this context, Saudi Arabia purchases U.S.-made weapons in astronomical amounts every year.

Recently, Saudi Arabia ignored the U.S. request to increase production and declared a cut in crude oil output. Despite U.S. President Joe Biden's visit to Saudi Arabia last July, relations between the two countries have deteriorated. This is not solely due to the well-known assassination of Saudi journalist Jamal Khashoggi. Since taking office, the Biden administration has ceased involvement in the civil war in Yemen, which borders Saudi Arabia. The civil war between the Sunni government forces and the Shia Houthi rebels in Yemen is largely a proxy war between Saudi Arabia and Iran. If the pro-Iranian Houthi rebels take over Yemen, Saudi Arabia would lose the buffer zone against Iran, which poses the greatest threat to its national security. Saudi Arabia feels that its ally, the U.S., is neglecting this crisis.

Considering the recent cost-benefit of its dealings with the U.S., Saudi Arabia likely felt no reason to comply with the production increase request. However, immediately after Saudi Arabia's production cut announcement, the Biden administration expressed anger and said it would reconsider bilateral relations. Still, it is extremely difficult for the relationship, intertwined with oil, dollars, and weapons, to change. The card the U.S. can currently consider is suspending arms sales to Saudi Arabia. A ban on arms exports could deal a blow to Saudi Arabia, where national security is paramount. Saudi Arabia desperately needs weapons. Crown Prince Mohammed bin Salman, the de facto ruler of Saudi Arabia, visited South Korea in 2019 and even went down to Daejeon to visit the Agency for Defense Development (ADD). This shows how significant his interest in weapons is.

Saudi Arabia's influence on the oil market is expected to strengthen further in the future. During the COVID-19 pandemic, global investment in oil development sharply declined, reducing the capacity for increased production among major oil-producing countries. For the time being, Saudi Arabia is the only country that can act as a 'swing producer,' adjusting prices by increasing or decreasing marginal production in the market. There is growing interest in whether U.S. weapons can control Saudi Arabia's oil.

Choi Ji-woong, Researcher at Korea National Oil Corporation Smart Data Center

This content was produced with the assistance of AI translation services.