Foreign
Saudi Arabia’s Future Superpower Partner Not the US
• Saudi Arabia appears to be recalibrating back toward China and Russia after the Iran conflict, with recent high-level meetings focused on expanding energy cooperation.
• The shift reflects a decade-long evolution that began after the 2014-2016 oil price war, when China deepened its influence in Saudi Arabia through investment, energy deals, support for Aramco, and alignment with Crown Prince Mohammed bin Salman’s economic ambitions.
• Riyadh’s confidence in U.S. security guarantees has been shaken by Iranian strikes on key Saudi energy infrastructure during Operation Epic Fury.
Since the replacement of Russia by China as the primary would-be superpower rival to the U.S., Saudi Arabia has sought to balance its relationships with Beijing and Washington — sometimes leaning more one way, and sometimes the other.
Until the 2014-2016 Oil Price War, the U.S. was the core relationship; after the war had finished, it was China and Russia; and then, from the start of U.S. President Donald Trump’s second term in office, it was the U.S. again. However, in the aftermath of Operation Epic Fury against Iran, this looks set to shift once more back to China and Russia, with a series of high-level meetings between Chinese and Saudi Arabian officials taking place last week. One of these — between the deputy head of China’s National Energy Administration, Song Hongkun, and Saudi Aramco’s Downstream President, Mohammed Al Qahtani — focused on boosting global energy security and bilateral oil and gas cooperation between the two sides. So, how has the global oil market arrived at this point, and what happens next?
The genesis of the current position lies in the financial devastation to OPEC countries of the 2014-2016 Oil Price War, fully analysed in my latest book on the new global oil market order.
Before the conflict started, there had been a broad and deep relationship between the U.S. and Saudi Arabia based on a landmark agreement between Washington and Riyadh formulated at a meeting on 14 February 1945 between the then-U.S. President Franklin D. Roosevelt and the Saudi King at the time, Abdulaziz Al Saud. The deal was this: the U.S. would receive all the oil supplies it needed for as long as Saudi Arabia had oil in place, in return for which the U.S. would guarantee the security of the ruling House of Saud and, by extension, of Saudi Arabia. This worked well enough to survive the 1973 Oil Crisis, in which Riyadh led an oil embargo alongside its OPEC brothers against the U.S. and its allies for helping Israel in the 1973 Yom Kippur War. However, it did not truly survive the 2014-2016 Oil Price War, as by then the U.S.’s shale oil sector had become a serious global oil-producing force, making the country much better able to withstand lower-for-longer oil prices than Saudi Arabia and its fellow OPEC members.
Moreover, Washington regarded this, effectively, as a second oil price war instigated by Saudi Arabia as one breach too many of the fundamental relationship agreement of 1945.
Following the financial devastation of 2014-2016 Oil Price War for Saudi Arabia and its OPEC brothers, they had little choice but to admit Russia to the wider ‘OPEC+’ grouping to restore the organisation’s shattered credibility in the global oil markets. China, in turn, was able to leverage the new-found power of its ally into extending its own influence in the Middle East’s leading energy state through a series of wide-ranging agreements made after 2016, and its immediate focus on laying the groundwork for these was a rising star in Riyadh — then-Prince Mohammed bin Salman (MbS). From the first year of the 2014-2016 Oil Price War, Saudi Arabia’s government budget went into deficit — to double digit levels of GDP in the first full year of the war — and it stayed in deficit until the end of 2021. At the same time, MbS was not the natural successor to King Salman, with the heir-designate to King Salman being Prince Muhammad bin Nayef, but the young Prince had an idea that he believed would help him progress — an initial public offering (IPO) of Saudi Arabia’s flagship firm, Aramco.
It was his belief, publicly aired in the second half of 2016, that if Saudi Arabia listed 5% of the firm on international stock markets then it would raise at least US$100 billion for the Kingdom in much-needed funds. This figure would also mean a valuation for Saudi Aramco of US$2 trillion, making it by far the most valuable company ever listed in the world, so restoring some of Saudi Arabia’s damaged reputation in the process. MbS also thought that a listing of Saudi Aramco in multiple major financial centres around the world, including the two most prestigious stock exchanges – the New York Stock Exchange and the London Stock Exchange – would project Saudi Arabia’s presence as an international player in financial markets as a whole and not just in the oil sector. All these reasons looked solid enough on the surface and the senior Saudis agreed to go ahead. However, almost immediately that the process began, questions began to emerge from international investors over the corporate structure of Aramco, the degree to which it would be subject to government control, its valuation, its true oil reserves and spare capacity, and the physical security of its fields, among many others. The upshot was that no serious international investor wanted to become too involved in the IPO and nor did the world’s most prestigious stock markets. That put MbS in a tricky position, as he was the original champion of the idea. However, at precisely that point, China offered to buy the entire 5% of Aramco scheduled to be offered in the IPO. Although the offer was eventually declined, MbS never forgot China’s gesture.
Shortly afterwards, in March 2017, a landmark visit to China by Saudi Arabia’s King Salman took place, during which around US$65 billion of business deals were signed in sectors including oil refining, petrochemicals, light manufacturing and electronics. In August that year, the then-Saudi Vice Minister of Economy and Planning, Mohammed al-Tuwaijri, told a Saudi-China conference in Jeddah that: “We will be very willing to consider funding in renminbi and other Chinese products.” The use of the renminbi was — and remains — a central plank of China’s strategy to subvert one of the key pillars upon which the U.S.’s global dominance is built — the use of the dollar as effectively the global reserve and trade currency, as also detailed in my latest book on the new global oil market order. Al-Tuwaijri’s comments came during the visit of high-ranking politicians and financiers from China to Saudi Arabia in August 2017, during which it was also decided that Saudi Arabia and China would establish a US$20 billion investment fund on a 50:50 basis.
According to comments at the time from then-Saudi Energy Minister, Khalid al-Falih, this fund would invest in sectors such as infrastructure, energy, mining and materials, among other areas. In August 2022, at the signing of a multi-pronged deal between Aramco and the China Petroleum & Chemical Corporation (Sinopec), the president of Sinopec, Yu Baocai, said: “The signing of the MoU introduces a new chapter of our partnership in the Kingdom…The two companies will join hands in renewing the vitality and scoring new progress of the Belt and Road Initiative [BRI] and [Saudi Arabia’s] Vision 2030.” Moving into the fourth quarter of 2022, Saudi Arabia reiterated its commitment to China as its “most reliable partner and supplier of crude oil,” along with broader assurances of its ongoing support in several other areas. This was in line with the earlier comments from Aramco chief executive officer, Amin Nasser that: “Ensuring the continuing security of China’s energy needs remains our highest priority – not just for the next five years but for the next 50 and beyond.”
This, and several similar comments around that time, appeared to confirm that Saudi Arabia had come to regard the U.S. as just another one of its partners — particular in the realm of providing security — in a new global order that would see Beijing and its allies share the leadership position with Washington, before attempting to surpass it. This view appears to have re-asserted itself after what Saudi Arabia — and many of its fellow Middle Eastern states — see as a failure by Washington to safeguard their security and economic interests during the war with Iran. Despite having invested hundreds of billions of dollars over the years in U.S.-supplied defence equipment aimed at providing the Kingdom with a security umbrella against attacks, Iran was able to hit key targets in the country, including the East-West Pipeline, the Manifa and Khurais oil Fields, the Ras Tanura Refinery and several other oil, natural gas, refining, and petrochemical sites stretching from the Eastern Province to Yanbu Industrial City. These successful Iranian attacks on Saudi Arabia’s critical energy infrastructure underline to Riyadh that, even on a security basis, the use of the U.S. appears limited. These concerns are heightened by the Kingdom’s broader fears that whatever the U.S.-Iran deal finally turns out to be, it will leave Saudi Arabia in a far more vulnerable position than it was before the war began.
By Simon Watkins for Oilprice.com
Simon Watkins is a former senior FX trader and salesman, financial journalist, and best-selling author. He was Head of Forex Institutional Sales and Trading
–Say action reminiscent of Jewish pogrom in 19th to 20th Century Europe
–Threaten legal action
By Son Tertsea, Abuja
2 former Israeli Prime Ministers, leaders and security chiefs have threatened legal action citing ‘Jewish terrorism’ in a leaked letter to Benjamin Netanyahu and military demanding action to stop violence against Palestinians in occupied West Bank, according to a source .
The Israelis from the country’s higher security, political and cultural elite are reportedly pitched against their government for supporting Jewish terrorism and an “ideology of ethnic cleansing” in the occupied West Bank.
According to a leaked letter, two former prime ministers, former heads of all the Israeli security services, former judges, a Nobel laureate and the country’s most revered living novelist were among the signatories to a “final warning” over violence against Palestinians.
They reportedly want immediate action to “eradicate Jewish terrorism”, cataloguing years of attacks – including murder, sexual assault, theft, arson and desecration of the dead – by civilian and military perpetrators who acted with “almost complete impunity”.
They say campaign of extreme violence against Palestinians broke Israeli and international law, put Israel’s security at risk, isolated the country internationally and escalated antisemitism around the globe.
“This letter is a wake-up call and a final warning: We demand that you take all necessary measures to immediately eradicate Jewish terrorism that has been prevalent in Judea and Samaria in recent years,” the letter reportedly said.
The letter stressed, if the prime minister, Benjamin Netanyahu, and his defence and security ministers and security commanders do not condemn and stop the violence, they will petition Israel’s high court to force a hslt.
The letter, which has not been made public, was sent to the prime minister’s office, the ministries of defence and national security, the military, police, and intelligence services. A copy was seen by the Guardian.
Signatories now raising the alarm about violence against Palestinians include commanders who led Israeli forces in occupied Palestine, and politicians who presided over years of settlement expansion.
Israel’s campaigning gets under way for elections due by the end of October.
The letter accused Netanyahu and his far-right coalition partners, expected to seek another term in power together, of enabling attacks on Palestinians to further an extremist agenda of ethnic cleansing and annexation.
“This is not solely a military and police failure, but the implementation of an overt policy by the Israeli government and its prime minister in general, and by the relevant ministers in particular.
“[They] order the military, the police, and Shin Bet [the internal security agency] to enable the terrorism of Jewish criminals, because this horrendous phenomenon serves well the current government’s ideology of carrying out ‘ethnic cleansing’ in the territories of Judea and Samaria to facilitate their future annexation.”
The letter further drew parallels with historic attacks on Jewish communities in Europe. “The crimes of Jewish terrorism in the territories are reminiscent of similar crimes and pogroms committed against our people by other nations in eastern Europe in the 19th and 20th centuries.”
Israel’s military was complicit in this campaign of terror, through a failure to intervene and active participation in violence, the letter said.
Attackers have included members of regional defence units, men in part-uniform, and men who were not in active service but carried weapons they got from the Israeli military or national security ministry.
“The IDF [Israel Defense Forces] has clear policy of ignoring the crimes of Jewish terrorism, and in many incidents soldiers from the regional defense units and [settlement] security squads are themselves involved in the crimes of Jewish terrorism,” the letter said.
Since 2020, Israeli soldiers and settlers have killed at least 1,100 Palestinian civilians in the occupied West Bank, at least a quarter of whom were children, UN data shows. No one has been charged over any of these deaths.
The attacks jeopardised Israeli security because they risked spurring Palestinian revenge attacks or even an uprising, or intifada, against Israeli occupation, the group warned.
Many signatories have previously denounced violence in the West Bank in public statements. However this letter, drafted and sent by the lawyer Shmuel Berkowitz, brought together a broader group, linked the violence to soldiers as well as settlers, and for the first time threatened legal action.
Signatories include two former prime ministers, Ehud Olmert and Ehud Barak, four former ministers whose portfolios included defence and justice, and more than 30 former security commanders including two chiefs of staff for Israel’s military and heads of the Mossad, Shin Bet and the police.
Prominent figures from outside politics and the security sector include the novelist David Grossman, the Nobel chemistry laureate David Kornberg, an Oscar winner and 10 Israel Prize award winners.
Signatories from the legal system include a former attorney general, judges and senior legal advisers to the government. From academia, signatories include the former CEO of Tel Aviv University and an expert on international terror. There are also rabbis and former ambassadors.
The letter said recent condemnations of violence by political and military leaders were not credible without action.
“How come you have not been successful in eradicating Jewish terror, given that the identity of their leaders and their places of residence are well known to you, and they are estimated to number a few hundred [people]?” said one section addressed directly to Gen Avi Bluth, the commanding officer in the occupied West Bank.
The letter warned of government financial, political and legal support for violence and a culture of impunity, with the Israeli police and military each claiming the other has jurisdiction to prosecute attackers.
The letter took direct aim at Netanyahu, noting that his claim last year that settler violence was the work of a few dozen teenagers had “no basis in reality”.
There were questions for other officials including the far-right national security minister, Itamar Ben-Gvir, the defence minister, Israel Katz, the chief of staff, Eyal Zamir, Shin Bet’s head, David Zini, and the police commissioner, Daniel Levy.
The prime minister’s office, the defence and national security ministries, the police and the Israeli military were approached for comment on the letter but did not respond
Foreign
US and Iran Fire Trade: After Trump Dubbed Tehran’s vessel attack “a foolish violation of … ceasefire agreement.”
Iran on Saturday accused the United States of violating the peace deal agreed to end the Middle East war, after Washington launched strikes on Iranian territory and Tehran responded with attacks on US targets in the Gulf.
The trading of fire, which came after Washington accused Tehran of attacking a cargo ship in the Strait of Hormuz earlier in the week, raised questions about efforts to keep the crucial waterway open while both sides negotiate a broader, final deal.
US Central Command (CENTCOM) said the latest American strikes, against Iranian missile and drone storage sites and coastal radar positions, were a response to “unwarranted aggression against commercial shipping by Iranian forces” that “clearly violated the ceasefire”.
But Iran lashed out at the attacks after its Revolutionary Guards launched its own retaliatory strikes.
“These brutal attacks, which targeted Iranian coastal surveillance facilities, are a blatant violation” of the memorandum of understanding to end the war, the Iranian foreign ministry said.
The Guards said they had struck US sites in the Gulf region in retaliation and that “if the aggression is repeated, our response will be broader than this”, according to a Telegram post by state TV.
Bahrain’s foreign ministry said the country was targeted by several Iranian drones early Saturday, condemning the attacks and accusing Tehran of “sabotaging peace efforts”.
On the US strikes, Iranian state television, citing a reporter in the southern city of Sirik, said an explosion was heard at a pier there late Friday. It quoted a military source saying a “projectile impact” in the area caused the blast.
“Sirik Port is operating normally, and no damage has been reported to its equipment or facilities,” Mehr news agency later said.
CENTCOM described the operation as “a powerful response to yesterday’s attack on a commercial ship that was transiting the Strait of Hormuz”.
US President Donald Trump had earlier denounced what he described as an Iranian drone strike on the vessel, saying “this is a foolish violation of our ceasefire agreement”.
Vice President JD Vance issued a direct warning, posting on X that “violence will be met with violence” if Iran carries out any further attacks.
Iran has warned vessels not to enter or leave the Gulf through the strait without permission, but ships have continued to move, some using a route not authorised by Tehran.
Despite the latest flare-up, oil prices have fallen sharply on hopes that traffic through Hormuz — a strategic waterway which normally sees around a fifth of the world’s oil and gas exports — would keep recovering.
Lebanon framework
Israel and Lebanon hailed an agreement signed Friday with the US to pave a way towards peace on their front in the war, although Iran-backed Hezbollah warned the deal would thwart plans to resolve the broader conflict.
The agreement — which includes a pilot effort in which Lebanese soldiers take control of two areas occupied by Israel, as well as a process aimed at disarming Hezbollah — is the result of five rounds of talks in the US capital.
At a Washington signing ceremony, Secretary of State Marco Rubio, flanked by Israeli and Lebanese envoys, said the trilateral accord “begins to put in place a framework for lasting peace and security”.
Israeli Prime Minister Benjamin Netanyahu welcomed the framework as a victory against Iran, which argues the Lebanon front is inseparable from the wider war and should be resolved as part of US-Iran talks.
He said the agreement would allow the Lebanese army to return to two “pilot areas” in southern Lebanon, but that Israeli forces would remain in their security zone until Hezbollah is disarmed. Displaced civilians would be prevented from returning.
Lebanese President Joseph Aoun welcomed the unpublished framework as a “first step” towards civilians returning home “under the sovereignty of the Lebanese state”.
But Hezbollah supporters took to the streets of Beirut late Friday to protest the agreement.
Nuclear safeguards
The UN nuclear watchdog has warned that any final US-Iran settlement would need strong safeguards to ensure Tehran does not build a nuclear weapon.
Iran’s nuclear programme remains a central sticking point, with Tehran and Washington giving conflicting accounts of whether inspectors will regain access to the Islamic republic’s facilities.
“The government of Iran has declared quite clearly that this is not their intention,” International Atomic Energy Agency chief Rafael Grossi said Friday of developing nuclear weapons.
“But of course intentions are not enough. We have to have a very strong verification system in place… as soon as is practicable.”
The interim agreement says Iran’s stockpile of enriched uranium should be “downblended” under IAEA supervision.
By Felix Umande
At least 920 people have been killed and 3,360 injured after two powerful earthquakes struck Venezuela on Wednesday night, with authorities warning the death toll could climb into the thousands as rescue operations stall under aftershocks and limited equipment.
Head of Venezuela’s National Assembly, Jorge Rodriguez, confirmed the latest casualty figures on Friday, according to Sky News. No fewer than 50,000 people remain missing following the 7.2 and 7.5-magnitude quakes, which struck within minutes of each other. The second tremor is believed to be the strongest to hit the South American country in more than a century.
Rodriguez said the earthquakes damaged 383 buildings, with at least 172 people still trapped beneath the rubble. La Guaira, the worst-hit area, has been fully militarised and the public urged to stay away.
“We appreciate the overwhelming desire to help, but the roads we are using to transport the injured are becoming congested. The best way to help is to keep the roads clear so that medical teams can transport patients and rescue crews can carry out their work more effectively,” Rodriguez said.
Venezuela’s acting President, Delcy Rodríguez, also announced the militarisation of La Guaira. The government has established a stockpile centre for food, water and medicines at the Foreign Ministry in Caracas, and officials are assessing buildings that sustained structural damage but did not collapse.
Sectoral Vice President of Public Works and Services, Juan José Ramírez, said rescue teams are using percussion equipment to break through concrete in search of survivors. However, persistent aftershocks and a shortage of heavy machinery have slowed operations in several areas, forcing residents in some communities to clear debris with basic tools.
Residents in coastal communities have appealed for civilian volunteers armed with “pickaxes and shovels” to assist.
The U.S. Geological Survey said fatalities were likely to run into the thousands, with a significant probability the toll could exceed 10,000. The death toll is expected to rise as emergency workers continue searching collapsed buildings across northern Venezuela.
Aid efforts have been hampered by damage to Maiquetía “Simón Bolívar” International Airport, which has been forced to close. U.S. Secretary of State Marco Rubio said the United States is ready to assist.
Families continue to post photographs of missing relatives on a dedicated missing persons website as the search for survivors enters a critical phase.
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