Anyone who follows the international debate on oil and gas prices will find that the Western consumer countries, which are in a difficult position because of the effects of the conflict in Ukraine, are pinning the consequences of the crisis on the producer countries. Russia is accused of using gas as a political weapon.
Parsing the whole scene points to various truths, the understanding of which helps conclude the missing dimensions of the stereotypical accusations that are heard in the media in the West.
The first point in the debate concerns Western demands for increased oil production by OPEC+ countries. These demands can have a reasonable amount of relevance if they are made in the context of a real crisis in global energy markets. But the bottom line is that the crisis is not about a lack of supply.
But a desire to undercut Russian oil and gas and limit Moscow’s ability to profit from its energy revenues. This is a purely geopolitical issue that has nothing to do with the supply and demand equation. Producing countries could suffer significant losses if prices fall below the level that is built into their overall budgets.
The second point is that the West ignores the maximum production capacity of OPEC+ countries, especially the Gulf countries. These countries are producing near their maximum production capacity. Therefore, it is difficult for them to compensate for the lack of Russian oil supplies.
There is also an opinion that this deficit is not real, but related to export destinations, in the sense that the ban on imports of Russian oil by Western countries, for example, does not mean that there is a deficit in the total global oil supply.
There is even a desire on the part of the West to restructure the oil trade to suit the wishes of these countries, which are well aware that the whole issue is governed by long-term oil and gas supply contracts. These contracts are difficult to control overnight. The whole crisis has clear digital realities.
It is expected to become more complicated by the end of this year, namely December 5, with the imposition of a total European ban on Russian oil imports, estimated at about 1.5 million barrels per day.
These are volumes that are difficult to offset, both by the difference between global supply and demand and by the increased production of some exporters, as well as by the introduction of other quotas, such as for Iranian oil in the event that an understanding is reached on the renewal of the nuclear agreement.
The reasons are technical, related to the weak ability to produce, export and reach maximum capacity in the short term due to the impact of international sanctions on the Iranian oil sector over the past many years. Undoubtedly, both producers and consumers are suffering from the crisis. Its disastrous consequences for the world economy and climate change plans.
There is an opportunity to roll back many of these plans to meet the current contingencies. But it is noteworthy that the US, for example, sees the crisis as a creation of the major oil-producing countries, especially Saudi Arabia. US policy in particular and Western policy in general have nothing to do with it.
Any decision on oil is highlighted as a challenge to US policy or as a message from Saudi Arabia to Washington, as we noted in US analysts’ comments on the recent OPEC+ decision to cut oil production. Their presentation of their views may have obvious relevance. But it is completely at odds with any comprehensive analysis of the situation.
The latter is not a bilateral duel between Riyadh and Washington, but a decision concerning the interests, policies and strategies of several oil-producing countries; Saudi Arabia has a budget and strategic interests to support, as does the US, which acts according to a strange unilateral logic that wants others to serve its interests even at the expense of their own.
Simply put, the West wants to achieve an impossible equation. It’s to deprive Russia of the oil revenues that fund the war in Ukraine. This is by increasing oil supplies from other producers, i.e., depriving the Russian treasury of the benefits of high prices.
This is the first half of the equation, diametrically opposed to its second half, — trying to keep Russian oil and gas out of world markets and seeking to isolate Russia energetically. It is a fictional scenario that puts the West in the category of punishing itself, since no one can compensate for Russian energy exports without affecting the price curve.
The point here is that the US is doing the opposite of what it says, or at best not applying what it declares, in the sense that Washington still views the oil-producing Gulf states as its subordinate tool in conflict and international competition, and does not demonstrate a conviction that these countries have strategic interests that they must pursue while maintaining a complex and sensitive balance with all major international powers.
The US has not in any recent situation demonstrated to these countries that it is a credible partner or its desire to preserve the historic alliances that exist between the two parties, which successive American administrations over the past two decades have wanted to turn into a one-sided partnership in which there are no rights for the second party and no responsibilities for the first.
The way out of these tight spots the West has found itself in is not to put oil producers in a corner of blame or to try to pressure them. But to reconsider the totality of US policy and take into account the interests of other countries in order to build a balanced relationship that can be counted on for the foreseeable future.
