How Musharraf Biden quietly looks to Saudi and Emirati relations to offset high oil prices

The two main targets of these efforts, Saudi Arabia and the United Arab Emirates, have had frosty relations with the United States since Biden took office. Both countries are members of OPEC, the powerful 13-nation bloc that collectively controls 40% of global oil production. Both were on friendly terms with the Trump administration.

But over the past month, US officials say progress has been made and there may be evidence that diplomatic work is beginning to pay off.

Officials said the comments reverberated inside the White House about the West Wing and fueled a sense that things were heading in the right direction.

Biden officials Hold diplomatic talks in oil-rich Venezuela this month, though the administration has since played down the idea of ​​any production increases from the heavily sanctioned country. The prospect of an imminent nuclear deal with Iran could eventually unleash a wave of sanctioned Iranian oil onto the market, but it is not seen as a near-term solution within the White House.

The truth is that the bulk of the spare oil capacity that US energy officials crave comes from the Middle East. In particular, officials and market participants see the fastest way to get the most oil out of the market by increasing production in Saudi Arabia.

For that to happen, US officials understand that they must address the deeply strained relationship between President Joe Biden and Saudi Crown Prince Mohammed bin Salman, the kingdom’s de facto leader who is colloquially known as MBS. Since the early days of the Biden administration, the Saudis have felt personally neglected by what they say was the president’s decision to calibrate the entire relationship around the 2018 murder of Washington Post journalist Jamal Khashoggi.

“It’s hard to get to a better place without dealing with Mohammed bin Salman,” explained a US official familiar with the matter. “There is no other way to do this.”

Important phone call

When US officials finally broached the possibility of a call between Biden and Mohammed bin Salman in late January, Saudi officials instead suggested putting Biden on the phone with his 86-year-old father, King Salman, the kingdom’s official leader β€” and individuals. Biden had identified early in his first year as his direct counterpart.

It will be their first conversation in 12 months.

However, officials involved in the matter point to what has since emerged as a window on a relationship that, while still complex, has shown signs of stability at a critical moment.

According to the Chinese Foreign Ministry, Mohammed bin Salman, who was due to travel to Beijing for the opening ceremonies of the Winter Olympics at the time of the call, canceled his trip “for scheduling reasons.” Two sources from the region briefed on the matter told CNN that the real reason was at least in part so that MBS could attend the call between his father and Biden.

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The sources said that while it is unclear whether he was in the room or not, Mohammed bin Salman listened to the call but did not speak.

The Saudi Arabian embassy in Washington did not immediately respond to a request for comment.

A US official said the February 9 call included a discussion on ensuring the stability of global oil supplies, and began a trip to Saudi Arabia by two of Biden’s top officials.

Three days later, Brett McGurk and Amos Hochstein, Biden’s top national security and energy envoys for the region, were in the Saudi capital of Riyadh for an hours-long face-to-face meeting with Mohammed bin Salman and an entourage of senior Saudi officials, including Mohammed bin Salman’s brother, Prince Abdulaziz bin Salman, the kingdom’s energy minister.

“It was based on the call,” a senior administration official said of the trip to Riyadh. “It was not decided in advance.”

Officials said there was no explicit request for an increase in supplies at that meeting. But with Russia just weeks away from what the Biden administration concluded would be a full-scale invasion of Ukraine, the volatile dynamics of a market in crisis have been a major focus of discussion.

In the days that followed, White House officials publicly declined to provide any specifics of the meetings and took pains not to describe what, if any, progress had been made.

But behind the scenes, the groundwork was laid for a weeks-long operation.

Since the meeting in Riyadh, the official said, the administration and the Saudis have had a “really productive set of posts following up on that discussion on a positive, positive agenda that reflects a very important set of issues that we are involved in.” This includes energy, regional security and international development issues, the official said.

The Saudis appeared to be highlighting the working relationship between the United States and Saudi Arabia on Thursday, publicly revealing that a joint Saudi-US operation earlier this year managed to safely get two American girls out of Yemen, according to an informed source. Subject.

However, other US officials concede that the relationship is not close to being as strong as it once was, and that it will require more intense attention at a high level from the Biden administration.

market turmoil

When did Russia start? foray On February 24, the United States and a coalition of more than 30 countries responded with sweeping sanctions targeting the country’s economy.

While energy sanctions have been deliberately scrapped in an effort to protect Western allies, particularly in the European Union, from destabilizing price shocks, harsh sanctions have disrupted the market with Russia sitting as the world’s second largest exporter.

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Russian producers, in the wake of the sanctions, have struggled to close new orders for oil, with market participants retracting, worried about the full scope and extent of sanctions targeting the country’s central bank and its largest financial institutions.

However, the impact goes beyond the Russian economy. Russia is a member of OPEC+, which is the most important player in market supply. Russian President Vladimir Putin spoke by phone to Mohammed bin Salman and Emirati Sheikh Mohammed bin Zayed Al Nahyan.

Russia has hinted that it will not support increased production, which will largely come at its expense.

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The OPEC+ members chose to stick to the agreed supply schedule when they met on March 2, a decision that came as no surprise to US officials at the time.

However, the economic fallout has since led to a significant disruption to supplies. As global energy companies ignore Russia, even though its oil production has stopped, many of those Russian barrels have failed to make it to the market. It is a critical, if subtle, distinction that OPEC members can make in any future decision to increase production targets.

Earlier this week, the United States acted on its owno Ban on imports of Russian oil To the United States, a small slice of Russia’s total exports, but another measure cooled the market and helped raise prices.

It is a painful reality that highlighted months of calm, but urgent communication by US officials to secure increased energy production from industry and countries around the world.

Led by Hochstein, the State Department’s envoy for energy, and McGurk, it included outreach across the Middle East, Asia, and North Africa, as well as extensive discussions with US producers.

As price hikes continue to emerge, the quiet nature of those efforts has given way to a direct public message.

“We want more oil supply in the world,” Dalip Singh, Biden’s deputy national security adviser for international economics and one in charge of the US response, told CNN on March 9. eligibility.” Singh explicitly indicated that Saudi Arabia is one of these producers.

UAE Endurance Test

The UAE is among those producers that have spare oil capacity. But it is also a traditional Gulf ally that has had an increasingly strained relationship with the United States since Biden took office.

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A US official explained that the United States felt particularly interested in the United States when there was little support for it after the deadly drone attack in the United Arab Emirates in January carried out by the Iran-backed Houthis.

They are also concerned that the revived Iran nuclear deal is too weak, thus empowering the IRGC.

When Biden deployed his top aides to Saudi Arabia, McGurk included a pause in the United Arab Emirates, where a special focus on Yemen included an effort to emphasize U.S. support for the country’s regional defense against Iranian-backed missile and drone attacks, officials said. .

In a statement to the trip, the White House said, as it did with the Saudis, McGurk discussed “the need to combine pressure on the Houthis in Yemen with a coordinated UN-led effort to end the war there.”

Signs of tension were evident in the wake of the Russian invasion.

Officials said the UAE abstained from a vote on a US-led resolution condemning Russia’s invasion of Ukraine at the UN Security Council, due in large part to frustration over Yemen.

Otaiba then presented the precarious dynamics in public statements noting that the relationship “has strong days when the relationship is very healthy and days when the relationship is questionable.”

“Today we pass an endurance test, but I am sure we will come out of it and get to a better place,” he added.

However, Otaiba’s comments on Wednesday were the first Send markets crash and establish some potential evidence that the Biden administration’s diplomatic efforts are beginning to bear fruit.

But even as the UAE indicated it would support increased production, the country also made it clear that it would have to abide by OPEC rules, which require all countries to support any move to increase supply.

The UAE Energy Minister, just hours after Otaiba’s remarks, appears to be retracting this – but he has never contradicted what Otaiba said.

Instead, he made clear the UAE’s support for working within OPEC guidelines.

“The UAE is committed to the OPEC + agreement and its current mechanism for adjusting monthly production,” Suhail Al Mazrouei said on Twitter in what appeared to be an attempt to reassure his fellow members.

The next OPEC+ meeting is scheduled for March 31.

CNN’s Natasha Bertrand contributed to this report.

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