Saudi Arabia Is At Risk Of Losing Another Key Advantage


After losing its key advantage as a price maker in the oil market, Saudi Arabia is at risk of losing another key advantage: its role as a stable Middle East regime– advantages which form the foundation of its close ties with Washington.

For years, Saudi Arabia has enjoyed an important advantage. In the oil market that is, as the “swing oil producer” and price stabilizer for Middle East oil.

“As the largest (by far) oil producer in OPEC, Saudi Arabia has also played the role of the key ‘swing producer’ in the group, raising or lowering production to help stabilize prices or supplies on the international market” says oil expert Kevin Rooney. “While they certainly have their own agenda, the Saudis have always taken the long view. The importance of the US-Saudi relationship lies in the fact that we both recognize that actions taken by either party have geopolitical and economic consequences, and that moderation begets stability which, in turn, begets a level of economic growth which is far more predictable.”

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Thats something that suited the US, as Saudi Arabia wouldnt dare to change oil prices without authorization from its close American ally.

As a commentator put it in response to a previous piece here: “Middle East oil prices were always controlled by the US and Saudi Arabia would have never dared to change oil prices without the explicit authorization of the US. Oil has been always a political weapon and most of the time it was used by the US to intimidate those who do not necessarily agree with their politics.

Source: Forbes

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