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Seemingly confirming Saudi Crown Prince Mohammed bin Salman’s (MbS) view that the US is now seen as another of his spouses in a new global order that would see Beijing and its allies share the leadership position with Washington, Saudi Arabia reiterated the last week his commitment to China as “the ultimate reliable spouse and supplier of crude oil,” along with broader assurances of its continuity in several other areas. That MbS now allegedly sees the US as a spouse simply for its security considerations, with no significant quid pro quo from Saudi Arabia, while seeing China as its key economic spouse and Russia as its key to power, is hardly surprising. . the United States. In March last year, this was made sufficiently transparent at the annual China Development Forum in Beijing, when Aramco Chief Executive Amin Nasser said: “Ensuring the continued security of China’s energy desires China remains our top sensible priority, not just for the next five years. years, but for the next 50 years and more. And yet the United States is stunned by the obvious finishing touch of Saudi Arabia’s transition from Washington to China, marking the end of the pivotal 1945 agreement between the United States and China. the United States Saudi Arabia that explained its dating until very recently. This transition was most recently noted in MbS’s refusal to accept a phone call from President Joe Biden requesting his help in lowering energy prices, and then in the massive relief in collective production, OPEC oil, this only added to to energy-related inflation fears for global economies.
Given the blunt way in which MbS rescinded the fundamental 1945 agreement, Washington is also angry, as evidenced by the very scathing comments of several senior US officials. there will be consequences for what they have done, with Russia [supporting oil costs by leading OPEC’s collective production cut of 2 million barrels per day (bpd)]. . . I’m not going to get into what I would do and what to keep in mind. But there will be, there will be consequences. Just before Biden’s comments, John KirthroughArray, the spokesman for the National Security Council, echoed official doubts about the long-term U. S. -Saudi security relations, saying Biden believed the United States deserves to “review bilateral relations with Saudi Arabia and take a look to see if this dating is where it wants to be and if it serves our national security interests. . . in light of the recent OPEC resolution and the leadership of Saudi Arabia.
Related: China’s Covid strategy keeps oil prices in check
In addition, last week, the two countries pledged to continue discussions on the progress of jointly incorporated petrochemical and refining complexes and cooperate in the use of nuclear energy. Although Saudi Arabia and China pointed to it as the “peaceful use of nuclear energy,” the news just before Christmas 2021 that U. S. intelligence agencies are in the process of nuclear power. The U. S. had discovered that Saudi Arabia now manufactures its own ballistic missiles with China’s help, and given the continued and extensive “assistance” to Iran’s nuclear ambitions, as discussed in detail in my most recent eBook on Global Oil Markets: The Lingering U. S. Fears of Nuclear Markets, the U. S. Is Not the U. S. Nuclear Unit. The U. S. ruling on the end of Beijing’s game in building the nuclear functions of key Middle Eastern states will not be alleviated.
This new round of talks and agreements comes on the heels of the signing of a multi-pronged memorandum between the Saudi Arabian Oil Company, formerly the Saudi American Oil Company, “Aramco” and China Petroleum.
Crucial to China’s long-term plans in Saudi Arabia, it also covers opportunities for the structure of a massive production center at the King Salman Power Park that will entail the continued presence on Saudi soil of a significant number of workers. Chinese. : Not only those directly similar to oil, gas, petrochemical and other hydrocarbon activities, but also a small army of security workers to ensure the safety of Chinese investments. By then, in early 2021, Aramco had a 25% stake in the 280,000 bpd Fujian refinery in southern China through a joint venture with Sinopec (and US-based ExxonMobil) and had also previously (in 2018) agreed ) buy a 9% stake. at China’s 800,000 bpd ZPC refinery at Rongsheng. Several other joint projects between China and Saudi Arabia that had been agreed in principle were delayed due to a combination of the fallout from Covid-19, Aramco’s overwhelming dividend payment schedule and considerations of both. countries, especially China, on how Washington might react to this apparent risk to longstanding US interests and geopolitical relations with Saudi Arabia.
Given Saudi Arabia’s transition away from the U. S. With the U. S. and China vis-à-vis China, and senior Saudi officials see the factor in those terms, whatever they say publicly, there is also an explanation for why to expect Riyadh to continue China’s efforts to undermine power. the US dollar also in the world energy markets. Saudi Arabia is not only now a driving force in the sale of the China-GCC Free Trade Agreement (FTA), one of whose main objectives is to forge “deeper strategic cooperation in a region where US dominance is showing signs of withdrawal”, but also the Kingdom is now one of the main proponents of the abandonment of the hegemony of the US dollar in the world price of oil and fuels.
Just after China made a very important face-saving offer to MbS to personally buy the full 5% stake in Saudi Aramco that it was originally looking to float but might not catch Western investors to buy, Saudi Arabia’s Deputy Minister of Economy and Planning At the time, Mohammed al-Tuwaijri said at a convention between Saudi Arabia and China in Jeddah: “We will be very willing to finance in renminbi and other Chinese products. “He added: “China is by far one of the most productive markets for diversifying financing. . . [And] we will also have access to other technical markets in terms of exclusive funding opportunities, personal placements, panda bonds and others. “In addition, recent reports imply that long-standing talks between Saudi Arabia and China for Saudi Arabia to fix the value and receive invoices for some of its oil sales in Chinese renminbi instead of US dollars has intensified in recent months.
By Simon Watkins for Oilprice. com
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