Russia's invasion of Ukraine has pushed the Brent crude's prices more than $100 per barrel, which is the highest in the last eight years. In the aftermath, the West is scrambling to find an alternative source of energy. Will US President Joe Biden consider approaching Saudi Arabia or any other Mid-East countries for more crude?
When Biden assumed his presidency nearly a year back, he had vowed to recalibrate the Trump-era US relations with Saudi Arabia and refused to speak with Saudi Crown Prince Mohammed bin Salman, a move which experts said was in line to show sympathy with the death of Jamal Khashoggi as reports had claimed that Khashoggi was murdered on the orders of the MBS.
However, Vladimir Putin's move against Ukraine seems to have changed the geopolitical scenario.
Last February, the White House had said that Biden would speak to the Saudi King but it is the Crown Prince who takes all top decisions including the oil policy. But in a year a lot has changed as the US faces the highest inflation in 40 years, mid-term elections near, and most importantly Brent crude crossed the $100 per barrel mark for the first time since 2014 on Thursday after Putin's full-scale invasion against Ukraine, reported CNN.
Alternative Sources of Energy
The massive surge in the oil prices has forced Western states to look for alternative sources of energy as interruption looms in the supply of Russia's vast oil and gas.
So far, the OPEC's de-facto leader Saudi Arabia and King Salman have rejected the US appeal for more oil as the block has pledged to follow the oil cartel's pact with Russia to limit production hikes.
Currently, Saudi Arabia has about 2 million barrels of spare capacity. But last week, after diplomacy broke down with Moscow, the West scrambled to make progress on another front in Vienna by renegotiating with Iran on the revival of the 2015 nuclear agreement, which was abandoned in 2018 by then US President Donald Trump.
The Iran Deal
If the agreement's revival is concluded, it could give the US and global oil markets much-needed relief with the release of Iranian oil Washington had sanctioned earlier.
With the emerging developments, Biden could be finding himself in dilemma. The US President could be reconsidering his refusal to call MBS and propose a new appeal or he could opt for Iran by removing sanctions and fulfilling oil needs.
An interim nuclear deal could allow Iranian exports to grow by 500,000 barrels per day (bpd) in April and May, expects S&P Global Platts. It also conveyed that a comprehensive agreement could allow 1.5 million bpd of export growth within nine months. Before the US pullout from the nuclear pact in 2018, Iran used to pump 3.83 million.
A Saudi Call
If Biden does not plan to choose Tehran he could approach Saudi. Abdulaziz Sager, chairman of the Saudi-based Gulf Research Center, said that Biden's issue with the crown prince is personal.
Sager underlined that if Washington has something to give to Saudi it should say loud and clear. "Say this is what you want. It's only logical for the US to change its approach to Saudi Arabia with oil at USD 100."
However, a senior non-resident fellow at Washington's Atlantic Council conveyed that even if Saudi Arabia agrees to the US request to raise output, it is not necessary to relieve pressure on the oil market.
"The [OPEC] oil ministers have indicated that they are skeptical about the ability to set prices precisely simply by increasing production," said Ellen Ward, senior non-resident fellow at Washington's Atlantic Council.
She also underlined that the causes of the recent surge in oil prices are due more to financial speculation and geopolitical risk than a lack of supply.
But Ellen continued to maintain that if Biden makes the much-anticipated call to MBS there is no surety that the latter could capitulate because of personal request.