Saudi Arabia's global influence is expected to weaken following the end of Donald Trump's presidential term, as the US places a greater focus on climate policies, as well as pressing domestic and foreign affairs. This is leading the kingdom, which wields its status as the world's largest crude exporter to support its policy aims, to reposition itself geopolitically to garner favor with the incoming administration of Joe Biden.
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"The US is starting to de-emphasize the strategic importance of the Middle East, ramping down involvement to move it down the agenda. The focus is on other things like East Asia, China, India and climate change, and the NATO alliance," Jim Krane Wallace S. Wilson, fellow for Energy Studies at Rice University's Baker Institute told S&P Global Platts. "For the Biden administration the pandemic and the recovery of the domestic economy is priority number one, then there's healthcare reform."
Biden's focus on climate change is a concern for Saudi Arabia because it will result in reduced demand for crude, the engine of its economy, said Krane.
"It's not just that the US is going to enact policies that reduce demand, it is that we are looking for substitutes for oil and that implies that oil is declining in strategic importance, and when that happens the producers also decline in strategic importance," said Krane. "The Saudis and Emiratis will see their influence gradually decline. It's inevitable as oil loses its monopoly as a transportation fuel."
On its foreign policies, Saudi Arabia has already made moves that could be seen as an outreach to the incoming US president and a bid to mitigate tensions. On Jan. 5, the kingdom led the surprising and swift resolution of the blockade of Qatar, following more than three years of a complete embargo on the tiny Gulf state. This served as a signal that Saudi Arabia is willing to acquiesce to the Biden administration in an attempt to remain in favor.
"By ending the blockade against Qatar, the involved countries may be sending a message to the incoming Biden administration that they are willing to cooperate with a new Middle East policy when Biden sits behind the wheel, as he is expected to take a more peace-oriented and compromising approach in the region," Mohsen Tavakol, Nonresident Senior Fellow of the Atlantic Council, said in a statement.
Tensions with the US are likely to increase. Resolving the blockade provided a quick win for international relations, but Saudi Arabia's stance on human rights is also expected to be in the cross hairs of the new US government and will likely be a considerable point of contention.
"I think the US are no longer prepared to give Saudi Arabia a free pass on egregious human rights violations. They will call them out on it," said Krane. However, the Biden administration is unlikely to revisit the murder of Jamal Khashoggi, he said. "They will likely try to deal with the Saudi regime without bringing that up."
Meanwhile, pressure is mounting for the Iran nuclear deal -- the Joint Comprehensive Plan of Action (JCPOA) -- to be reestablished amid Tehran's increasing uranium enrichment activities and elections later this year, which could usher in a more hardline and anti-Western government. Biden has indicated he intends to bring back the deal, which would lead to a dismantling of some sanctions against Iran, if successful. This could lead to the reintroduction of 2.2 million b/d of Iranian crude onto the global market.
The US is unlikely to involve Saudi Arabia in any discussions over a deal, however.
"The reactivation of the JCPOA is an American project," a Europe-based oil industry advisor said. "Of course Saudi Arabia would like a seat at the table. But the JCPOA comes first, and if there are any other negotiations to be had regarding Iran's role, then there would be a wider discussion."
Even so, with the Biden presidency looming, Saudi Arabia may be softening its approach over Iran – its sworn foe – making the possibility of it publicly objecting to a deal unlikely.
Saudi Arabia's willingness to cut production beyond its OPEC quotas – such as its pledge in the January OPEC meeting to voluntarily cut an additional 1 million b/d in February and March – could also pave the way for an Iran deal, a Gulf-based industry consultant said.
"Such cuts would allow for a smooth transition for Iran to ramp up production," the consultant said. "They would give the Biden administration a possible leeway to do the JCPOA."