Financial News

Saudi Arabia Bites Back Over ‘Oil Cartel’ Jibes

Incoming US President Donal Trump has picked his first fight with another country by threatening to block all Saudi Arabian oil imports to the United States.

Trump wants to make America’s energy independent from outside influence from ‘foes and oil cartels’.

He has repeated his intention at several appearances and rallies, although no official policy announcement has been forthcoming.

Now, the worried Saudis are biting back.

Energy minister Khalid al-Falih pointed out that oil was just one side of the free trade coin between his country and America.

Blocking trade is unhealthy

“At his heart President-elect Trump will see the benefits and I think the oil industry will also be advising him accordingly that blocking trade in any product is not healthy,” he said.

“Although the US imported millions of barrels of oil, it had also “benefited hugely” from being able to freely sell “significant amounts” of exported products.”

The minister also explained that America has acted as a flag-bearer for capitalism and free markets.

“The US continues to be a very important part of a global industry that is interconnected, that is dealing with a fungible commodity which is crude oil. Having equalisation through free trade is very healthy for oil,” said al-Falih.

His remarks come at a time when Saudi Arabia, the world’s largest oil exporter has come under pressure from Iran and Iraq coming back online as oil suppliers at the same time as oil-shale production has hit new records in North America.

Massive deficit

The price of oil has tumbled from $115 a barrel two years ago to $45 a barrel, punching a multi-billion dollar hole in Saudi Arabia’s foreign earnings and triggering a massive $100 billion government deficit.

Although Saudi Arabia has enormous cash reserves, the nation is America’s largest Middle East supplier with a 11% market share and a huge infrastructure investment of pipe lines and refineries to service the exports.

Another issue is the effect fossil fuels are having on the global climate.

Trump has also said he does not believe the ‘evidence’ and that industrial rivals are stealing a march on the US by failing to abide by stringent controls while America has lost jobs and opportunities while playing to the rules.

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