Saudi Arabia-Russia Oil Alliance Takes Over US

The developing oil alliance between Saudi Arabia and Russia poses big problems for both the US economy and the election campaign of President Joe Biden. OPEC+ decided to cut crude production for the second time this month since Biden went to Saudi Arabia to boost production last summer.

In the analysis signed by Ziad Daoud and Courtney McBride in Bloomberg, it was stated that the movements of the OPEC+ group increased the risks of recession and inflation.

DECISION TO INTERRUPTION ACTIVES THE RISK OF STAGE

According to the analysis, the increase in power of the OPEC+ group under the leadership of Saudi Arabia-Russia contributed to the rise in oil prices and inflation, while increasing the risks of recession in the economy.

Following the April 2 cutoff decision, oil prices increased by about $5 per barrel. Fears that consumers who spend more on energy will reduce their other expenses have raised recession fears. It also showed that fighting inflation, which has been a problem for a long time, can stay high for a while.

‘SAUDI IS BROKEN FROM THE WASHINGTON TRAT’

While it was also claimed in the analysis that geopolitical alliances had changed, it was claimed that Saudi Arabia began to separate from Washington’s orbit. The Saudis have recently begun determining oil production levels in coordination with Russia.

On the other hand, the Gulf kingdom turned to China to broker a deal, bypassing the United States to reduce tensions with Iran. Western influence in the oil monopoly has fallen to its lowest level in recent years.

PRICES NO LONGER DETECTED BY US FRIENDS

The analysis states that there is no guarantee that the Saudis will be able to maintain the front they have established with Russia and the OPEC+ countries, and that “for now, the price of the world’s most important raw material is determined by one country.” . that the US can no longer be trusted as a friend.”

Speaking after the April 2 move, Saudi officials said the move was determined by national priorities rather than a diplomatic agenda.

Speaking to the Asharq Al-Awsat newspaper, former Saudi Arabian Oil Minister Mohammad Al Sabban said: “OPEC+ now and in the past has been able to stabilize oil markets. Contrary to the claims of Western states, this has nothing to do with politics,” he said.

INFLATION WILL INCREASE

Current prices are expected to be well above this average. According to the Bloomberg Economics model, for every $5 increase in oil prices, US inflation is expected to rise by 0.2 percentage points.

Due to geopolitical tensions and the current economic environment, analysts forecast prices to remain above $80 per barrel for years to come.

COUNTRIES WITH CHEAP RUSSIAN OIL ARE COMFORTABLE

On the other hand, it is believed that this situation will affect countries that can buy less cheap Russian oil. Although countries such as China and India are the largest contributors to oil demand, China partially shields itself from price increases.

China buys a significant amount of Russian and Iranian oil at a discount. India, another large and fast-growing emerging economy, also gets cheap fuel from Russia, which has become its biggest supplier.