U.S. president Trump is facing strong internal pressure to punish Saudi Arabia in the coming days. For Washington, however, this could be a double-edged sword, as turning on Saudi Crown Prince Mohammed bin Salman could result in two unwanted major geopolitical consequences. The still fresh Jamal Khashoggi murder case continues to make headlines due to a relentless anti-Saudi media and a diplomatic offensive by Turkey, Qatar and Western diplomats, and it could trigger the largest U.S.-Saudi/Arab crisis in decades.

U.S. politicians have set their sights on the position of the young Saudi Crown Prince, based on still unsubstantiated claims of direct involvement by Ankara and unnamed CIA-officials, U.S. president Trump finds himself backed into a corner to deal directly with the Kingdom.

Until now, the U.S. Administration has refrained from mentioning the direct involvement of MbS in the murder of the former Saudi journalist, but has put sanctions on the officials being connected to the case. Inside of the Kingdom, the pressure is also increasing but this time not to remove MbS, but instead to prepare a harsh response to any possible U.S. claims or sanctions on Royal Family members. Senior Saudi officials have already indicated that a direct attack by Washington or European leaders will be met by severe repercussions.

A Western-Turkish move to pressure Saudi King Salman to remove his son from power is at present unrealistic. Looking at the ongoing situation inside of the Kingdom, and in the Arab world, the support gathered the last weeks by the Saudis from their allies UAE, Bahrain, Egypt, Jordan and Lebanon, is clear. No Arab country will allow for a ruling Crown Prince to be removed from power by an outside, non-Arab entity. Inside of the Kingdom, the atmosphere is very clear, keep your hands off MbS. In contrast to the ongoing discussions in the Western media or Turkish outlets, there are no clear signs of a growing opposition to the plans and rule of MbS. The Crown Prince has not only been able to weather the storm before and during the FII2018 period, when global media reported on a failure of the Desert in the Storm financial conference, he has also removed potential opposition to his Saudi Vision 2030 strategy and power plays before.

Still, some opposition exists, even if it is not vocal at the moment. Conservative elements in the Saudi power constellation, supported by former high-ranking Royals, will be waiting for any sign of weakness, trying to hit where it really hurts. Currently, three major factors could lead to instability: MbS’s future depends on a partial success of the high profile diversification of the Saudi economy, weaning it from its oil addiction, and implementing some hard needed changes to give future perspective to the large young population of the country.

At the same time, the diversification needs a reasonably high volume of FDI, which is supported by higher oil prices. For the immediate and mid-long term, MbS will need to have the support of the regional power players, Sheikh Mohammed bin Zayed (Abu Dhabi), Bahrain’s Crown Prince, Egypt’s President Sisi and King Abdullah II of Jordan. Looking at FII2018 and the last weeks, these factors he still has in place. To counter the U.S., Saudi Arabia’s Crown Prince has made the right choices the last couple of years. MbS and Russia’s Vladimir Putin are reading out of the same book. The ongoing OPEC-Russia cooperation comes out of the screenplay written by MbS (and Khalid Al-Falih) and Putin (supported by Novak). Even before the Khashoggi case, both leaders understood that in times of need new friends could be needed. At the same time, the advantages of changing sides or alliances had become clear after the disaster called the Arab Spring. The West went flat on its face, and left the region to bleed. The only strong man willing to bleed with the Arabs has been Putin, which is currently being appreciated in all Arab capitals, from East to West.

Washington now has to decide what it wants from the region. Without any doubt, Washington and Brussels, even combined with Ankara, will not be able to remove the Crown Prince from power. When looking at the power composition of the Kingdom, and the intertwining of the future of the UAE, Bahrain and Egypt with the future of the Saudi Kingdom. The rapprochement between Cairo and Riyadh, the in-depth economic and military cooperation between Riyadh and Abu Dhabi, and the bloodline between Riyadh and Manama, are not to be underestimated. Outside threats have brought them together, maybe even with the help of the invisible powers of the Jordanians, but these relationships cannot be easily dissolved by outside powers. A decade ago, all of the above relied on Washington, or some positive feelings in the EU, but at present a new kid is in town, called Vladimir the Bear. Any pressure from Washington, even if based on facts or relevant assessments, will result in a countermove in the Arab capitals. The removal of Gadhafi, Hosni Mubarak and others, helped by Westerners, has left deep and ugly scars in the mind of the Arab leadership.

As long as U.S. president Trump is not openly showing a confrontational course with the Saudi Royals, some ‘’friendship or partnership” is still on the table. However, if Trump, maybe forced by the U.S. Senate and Congress, addresses MbS as the main culprit in the Khashoggi case, the gloves will be off. An anti-Western/U.S. move by the mainstream Arab countries will be a threat not only to Western influence in the region, but also confirms Russia’s growing influence in the region.

Intensified cooperation between Russia and Arab power players will be a nightmare scenario for U.S. and EU policy strategists. The first effects will be that Trump’s Tweets and Brussels’ warnings will be met by a one-sided NOPEC oil production cut and price strategy. Without any doubt, one of the outcomes could be that OPEC and Moscow, already accused of playing a price cartel strategy, will no longer keep the wishes of Western partners in mind. There will be no more room for policy negotiations on volumes, prices and economic growth as Putin and Crown Prince will decide their own fate.

The second issue will be that Russia and the Arab world will decide their own new geopolitical structures and power plays, in which the U.S. and Europe are no longer on their priority list. A full-scale 180 degree strategic turn by the Arab world is not in the interest of the world, and especially not of the West.

A strong NOPEC oil strategy, based not only on market fundamentals, but infused with geopolitical backlashes and power play, will result in a very volatile and risky environment. Politics always have been playing an important role, even if Khalid Al Falih continues to reiterate that OPEC is not a geopolitical policy maker, but a producer of commodities.

Strangely none of the major analysts have looked at the position of Moscow in the Khashoggi affair. Putin and his consorts have been totally quiet, not addressing the case at all. At the same time, Moscow and Riyadh have been working out major investment deals, energy cooperation for the next century, while Russian forces have been flying into major Arab capitals for so-called military exercises with friends. While we have been reading newspapers and listening to one-sided news analysis coming from Turkey and unnamed sources, the main players have discussed already the full answer to any threat possible.

The OPEC meeting in December could be the first sign of a new energy/geopolitical reality, in which U.S. shale is being met by a Russian dreadnought fueled by Saudi oil. The signs are written on the wall that changes are imminent, but don’t expect it to be news about the removal of the Saudi Crown Prince. OPEC is changing, while geopolitical power brokers have already created a new theater of powers. Trump will have to switch gears to cope with this growing threat. Without some real brinkmanship, Khashoggi could be the next millstone around the neck of the U.S. president, not on the head of MbS.

By Verocy for Oilprice.com

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