To be clear, Saudi Arabia remains important to energy security and stability in the Middle East, to global economic prosperity, and as a regional ally against Iran, but it made a terrible mistake this week.
Plus, only Russia has had to offer huge $35/barrel discounts to customers like India and China since few others want sanctioned Russian oil. technology, the Saudi’s cost is only $22/barrel. It costs Russia $46/barrel to extract oil but, with U.S. to the benefit of Russia.Įvery OPEC member has been making massive profits recently - except Russia because it is OPEC’s least efficient producer. In other words, there was no immediate need for Saudi Arabia to reduce supply unless they were seeking to harm the U.S. Presently markets are very tight, with lush 73 percent profit margins for Saudi Arabia. Nor can this Saudi move be justified by the non-existent global recession its leaders cite. OPEC has never cut production in such a record tight market and these production cuts will lead to unsustainably low oil inventories, sending the price of oil skyrocketing out of any “acceptable band.” Furthermore, the G-7 oil price caps plan is not targeted at OPEC it is strictly limited to Russian oil. Denying any political motives, Ali Shihabi, a Saudi analyst, insisted in the New York Times that the move was merely “to keep the price in an acceptable band.”īut this claim is unjustified. What would lead the Saudis so unwisely to err with their recent OPEC+ mistake? Stunned energy commentators have suggested that the Saudis were merely concerned about their endangered financial returns, acting rationally. Simply put, America shouldn’t be providing such unlimited control of strategic defense systems to an apparent ally of our greatest enemy - nuclear bomb extortionist Vladmir Putin. also has a way to respond: It can promptly pause the massive transfer of American warfare technology into the eager hands of the Saudis. The Saudi decision was a pointed blow to the U.S., but the U.S. to bring down the price of gas, and help fuel Putin’s unprovoked invasion of Ukraine. The shocking move will worsen global inflation, undermine successful efforts in the U.S.
This week, Saudi Arabia colluded with Russia - deciding to cut 2 million barrels a day of oil production at the OPEC+ meeting, thus raising the price of gas to Russia’s advantage. The opinions expressed here do not reflect the opinions of Yale University. Jeffrey Sonnenfeld is senior associate dean of leadership studies and Lester Crown professor of leadership practice at the Yale School of Management. He serves on the House Armed Services Committee. Ro Khanna, a Democrat, represents the 17th district of California. He serves on the Senate Armed Services Committee. Richard Blumenthal, a Democrat, is senior U.S.
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