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    Saudi Arabia Unlikely Would Reconsider Contracts Signed with US Companies - Analyst

    Saudi Arabia Unlikely Would Reconsider Contracts with US Companies - Analyst

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    Sputnik asked Francis Perrin, the chairman of SPE (Stratégies et Politiques Energétiques [Energy Strategies and Policies]) and the publisher and editorial manager of Arab Oil & Gas and Pétrole et Gaz Arabes for the insight into the current Riyadh-Washington politics.

    Sputnik: Are we about to witness US “damage control” operation?  Could Pompeo visit in Riyadh be part of this operation?

    Francis Perrin: Clearly yes. The scenario of "rogue killers" was obviously prepared by the US and Saudi authorities. When the US State Secretary left Saudi Arabia he said that "there is serious commitment to determine all the facts and ensure accountability". We can of course have strong doubts on the willingness of the Saudi leadership to do that.

    Sputnik: Do you think that current geopolitical situation can seriously affect US business? Could gulf state reconsider its oil and arms contracts which can lead to heavy loses for American industries?

    Francis Perrin: President Trump once more referred to $110 billion of arms sales contracted by the US and Saudi Arabia following his trip to this country in May 2017. But we know this figure is greatly exaggerated to say the least. Arms contracts signed since this official visit are only a small fraction of this figure.

    It is very unlikely that Saudi Arabia would reconsider the contracts signed with US companies, whether in the oil and gas or arms sectors.

    Sputnik: How well do you think Saudi Arabian investments are integrated in US economy? (Saudi Arabia purchased Port Arthur biggest oil refinery in US)

    Francis Perrin: Saudi Arabia has invested and will go on investing in the US economy, which is the largest economy in the world. The national oil company, Saudi Aramco, is one of these key investors with its subsidiary, Motiva Enterprises, which is based in Houston and is an important refiner and oil marketer in the States. Saudi Arabia also holds a significant part of the US Treasury's debt. US oil and chemical companies are also very important investors in the Saudi economy (mainly in the refining and petrochemicals sectors).

    Sputnik: Do you think that Trump and his administration will try to distance themselves from this situation and avoid financial and foreign consequences especially after his “rouge killers” remarks?

    Francis Perrin: It’s been reported yesterday that Riyadh is considering serious cuts in oil production if US approve its sanctions bill. Can Saudi officials really spark a new oil crisis or it’s a simple bluff?

    Saudi Arabia is not seriously considering large oil production cuts at a time when oil prices are higher than $80 per barrel and with the possibility of an oil shortage due to a rising world oil demand, declining Iranian exports and a falling Venezuelan production. Saudi Arabia is under strong US pressure in order to put more oil on world markets, not less. Saudi Arabia will definitely not spark an oil crisis. It would be totally contrary to its longstanding oil strategy and its national interest.

    Sputnik: Could it be argued that US failed to develop a constant strategy regarding this crisis?

    Francis Perrin: The US Administration was surprised by what happened and by the behavior of one of its key allies. It was late in reacting strongly to this political crisis, which it greatly underestimated, and was pushed by the media and the US Congress. A real strategy was developed only about 10 days after the disappearance of Jamal Khashoggi, which is a very long time in the 21st century for such a crisis.

    That being said the alliance between the US and Saudi Arabia, which is a very old and strong one, will survive. It began in 1945 and is based on three very simple words: oil and security. It remains valid in 2018 and beyond. Another key issue is a common perception of the Iranian threat.

    The views expressed in this article are those of the speaker, and do not necessarily reflect those of Sputnik.

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