After Reducing Oil Production, Three Sanctions That Biden May Impose on Bin Salman

The decision of the Organization of Petroleum Exporting Countries and its partner OPEC+, led by Saudi Arabia and Russia, to reduce production by two million barrels per day starting from November 2022 angered the US amid risks of further sanctions against the kingdom.

CNN reported on October 5, 2022, that Washington considers OPEC's decision to reduce its oil production and then raise fuel prices as a "hostile act" led by Saudi Arabia against the United States.

It said in a report published on October 6, 2022, that officials from the administration of US President Joe Biden visited the allied oil countries to persuade them not to reduce production, but they failed.

A draft of the talking points obtained by CNN indicated that Washington told them that reducing oil production was a "complete disaster" and warned them that it would consider it a "hostile act."

The American network described the OPEC decision, which ignored Washington's demands, as showing the failure of pressure, stressing that the White House is seriously considering cooperating with Congress to punish Saudi Arabia.

 

Alliance Disintegration

US officials described the decision, to the Financial Times on October 6, 2022, as an aggressive move to raise crude oil prices that puts Saudi Arabia on a collision course with America.

With the escalation of Saudi-American tensions, there will be long-term repercussions for the disintegration of the Washington-Riyadh alliance.

Observers believe that Saudi Arabia's decision to support OPEC's reduction of oil production by two million barrels, and not one million or half a million as was expected, is related to the Biden administration's refusal to grant immunity to Saudi Crown Prince Mohammed bin Salman from trial before American courts.

OPEC currently produces 30% of global oil production, and in its future production plans, the organization aspires to produce about 48 million barrels per day, or nearly half of the global oil need, which amounts to about 100 million barrels.

After the price of a barrel of oil rose to 120 and 140 dollars, it fell to 93, and the member countries of OPEC+ justified the reduction of production by the desire to maintain a price level that is not significantly low and to ensure the continuation of the current "oil financial boom."

The OPEC+ alliance said that it took this step in light of the uncertainty surrounding the economic outlook and the global oil market and the need to strengthen the long-term guidance of the oil market.

When the US President visited Saudi Arabia in July 2022 and met King Salman bin Abdulaziz and his crown prince, the White House hinted at an agreement to increase oil production to reduce prices, and the next two months witnessed an increase in production and an already lower price.

The joint US–Saudi Jeddah statement of July 15, 2022, did not specify any Saudi steps to increase oil. It just said that the kingdom's commitment is to support the balance of global oil markets for sustainable economic growth.

However, another "fact sheet" issued by the White House confirmed, on the same day, that the kingdom committed to increasing oil production by 50 percent, more than what was planned during July and August, to contribute to largely stabilizing the markets.

Bin Salman said at the time that the kingdom would increase its production capacity to 13 million barrels per day, which Washington considered a gain.

 

Political Risk

On August 22, 2022, Saudi Arabia hinted at the possibility of the OPEC+ group reducing oil production rates, and that worried America, which sought to change this decision by putting pressure on Riyadh in particular.

But OPEC's recent decision to cut production significantly from November 2022, in contrast to the US–Saudi understandings, again led to higher prices in the United States and a decline in Biden's popularity less than a month before the midterm congressional elections.

The timing of the OPEC+ decision was an embarrassment to the Biden administration because the high prices of Americans buying oil just five weeks before the midterm elections for Congress constitutes a "political danger" that the White House is desperately trying to avoid, according to CNN.

Biden said on October 5 that he was "concerned" about the cuts, which he considered "unnecessary" because they would raise oil prices in America and reduce his popularity, while his Democratic party is heading to a grinding midterm elections with their Republican opponent.

On the same day, White House spokeswoman Karen Beer responded to a press question if Saudi Arabia is a reliable partner, stressing that the OPEC+ decision is wrong, and it is now clear that OPEC, through its decision, is aligning with Russia.

On October 5, 2022, The Economist described the Saudi-backed OPEC decision as contempt for US President Biden, which he visited three months ago in an attempt to persuade it to pump more, but it later challenged him.

CNN quoted Senator Chris Murphy, a major critic of Riyadh, saying that he thinks it's time to reassess the US alliance with Saudi Arabia.

The OPEC+ decision also angered the Biden administration because it saw it as a step in favor of Russia, as it would increase Moscow's financial returns from selling high-priced oil at a time when the West is seeking to besiege it.

 

NOPEC Punishment

According to what was reported by American newspapers and statements by Biden administration officials, Washington may move to deal with this decision in three punitive ways.

It revolves around the refusal to give bin Salman immunity from prosecution in America and the activation of the NOPEC law to prosecute the monopoly of OPEC.

The first of these penalties, and perhaps the most important, may be the continued tightening of the American courts on bin Salman through the lawsuits filed calling for his trial for the murder of journalist Jamal Khashoggi on October 2, 2018, and the failure to recognize that he has "immunity" even though his appointment as Prime Minister of the Kingdom was aimed at providing this immunity, according to his lawyer.

There is still legal debate in the Khashoggi case about whether or not bin Salman should enjoy immunity from this case.

Bin Salman's lawyer asked a Washington court judge on October 4, 2022, to dismiss a case accusing the Saudi crown prince of ordering the murder of journalist Khashoggi, arguing that his new role as prime minister gives him legal immunity.

While the Biden administration did not respond to the court in this regard, it is believed that the OPEC decision is part of a Saudi response to this hesitant American position in granting him official immunity.

The second of these possible US sanctions is the intervention of Congress by activating the sanctions of the NOPEC law, which is the first federal anti-OPEC law to coordinate oil prices, as the Washington Post newspaper explained on October 5, 2022.

Saudi Arabia's decision to cut oil production has made senior White House officials think about their most assertive next steps and publicly hint at unprecedented measures to weaken Saudi Arabia's grip on international energy markets, according to the American newspaper.

The newspaper quoted analysts as saying that OPEC's decision sparked a violent reaction within the White House and may lead to exacerbation of geopolitical tensions at a perilous moment for the world's major powers.

The Financial Times said on October 4, 2022, under the headline "The Saudi–American oil alliance is approaching the brink," quoting former White House adviser Bob McNeely, that if oil prices return to $100 a barrel, the US administration will be forced to respond, and that it would be difficult to suppress the Congress that may demand the passage of the NOPEC law that it seeks to enact since the end of the nineties of the last century. It was called so in reference to the rejection of OPEC's control over the production policy and raising the global price of crude.

Some congressional representatives pressed for its passage several times, but the US administration was constantly disrupting it, and it finally resurfaced in conjunction with the rise in fuel prices to unprecedented historical levels and as a weapon used by the Biden administration to threaten Saudi Arabia.

However, the OPEC+ decision will give a boost to the NOPEC bill in Congress that allows for the prosecution of OPEC+ under the antitrust law, although it will have to overcome opposition from lawmakers and oil companies who fear retaliation.

 

New Strategy

The Washington Post quoted a statement by the two representatives behind the reactivation of the NOPEC law, Tom Malinowski and Sean Kasten, as saying that it is time for America to resume acting as a superpower in the US relationship with its client states in the Gulf.

The project allows the abolition of the sovereign immunity that protects OPEC and the national oil companies in its member states from lawsuits.

If NOPEC becomes a law in force, the US attorney general will be able to sue OPEC or its members, such as Saudi Arabia, in a federal court, and he will also be able to sue other producers in OPEC Plus, such as Russia.

The third possible US punishment for Saudi Arabia will be the implementation of the so-called Biden's new strategy on Saudi Arabia, which is a more severe approach as a "third-rate power," according to the Axios analysis.

The idea of ​​describing the kingdom as a third-class power is based on the punishment of the bin Salman regime by passing a ban on the supply of air spare parts to the Saudi Special Air Force from Congress with the support of Biden.

Political analyst Simon Rosenberg believes that there are four justifications for describing the OPEC+ decision as hostile towards the United States.

The first is that it may push the global and American economies into recession due to the rise in energy costs supported by reducing the quantities supplied in the global market.

The second reason is related to the timing of the decision, as it comes at a sensitive time, weeks before the US elections, so it may be seen that Riyadh supports the Republican Party in the elections at the expense of the Democratic Party.

The third reason is that reducing quantities will raise prices, which means that Saudi Arabia helps Russia increase its revenues, which allows Moscow to continue financing its war on Ukraine.

Fourth, according to Rosenberg, this decision may be risky regarding Riyadh's relations with Washington or even with the international community.