DUBLIN – If you’ve been following international news at all you’ll no doubt have seen the growing diplomatic dispute over the fate of journalist and US resident Jamal Khashoggi. Khashoggi allegedly disappeared after entering the Saudi consulate in Istanbul. The Turkish authorities say they have evidence that the Saudi’s murdered Khashoggi, while the Saudi’s maintain that he left the consulate alive soon after arriving. Saudi, Turkish, and American authorities are converging on Istanbul to investigate the matter. But whatever the outcome, the tensions that have been flaring between Saudi Arabia and the US over the matter have had one definite effect: a jittery oil market. The threat – however remote – of possible US sanctions against Saudi Arabia or of punitive Saudi oil production cuts has been enough to send jittery oil prices higher. After easing of its late-September highs, oil has ticked up again recently in response to the Saudi situation. The world can’t afford to lose crucial Saudi oil supplies, but the US cannot permit blatant human rights violations of its residents. Let’s hope the mystery is cleared up soon and favourably. – Felicity Duncan
This Isn’t 1973 for Oil, But Don’t Discount Saudi Ire
By Spencer Jakab
(The Wall Street Journal) Relax—this isn’t 1973. But don’t relax too much.
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Oil prices ticked higher over the weekend when the Saudi Press Agency put out an ominous statement from an unidentified senior official threatening a hard response to actions the U.S. might take in response to the suspected murder of journalist and U.S. resident Jamal Khashoggi. It said Saudi Arabia would “respond with greater action,” stressing Saudi Arabia’s influential and vital role in the global economy.
No prizes for guessing what that role is. But memories of 45 Octobers ago when the “oil weapon” was unsheathed by Arab oil exporters led by Saudi Arabia and crude prices quadrupled bear no resemblance to today’s reality. For one, that embargo is acknowledged to have backfired in the long run. For another, the White House is bending over backward to defuse the situation with President Trumpdispatching Secretary of State Mike Pompeo to Riyadh to meet with the king and even suggesting to journalists on Monday that “rogue killers” might have been behind the alleged murder.
But Mr Trump needs Saudi Arabia more than usual at the moment. With Iran sanctions getting tighter, Venezuela’s production collapsing and oil prices hitting a four year high before last week’s stock market-induced tumble, the only meaningful spare capacity today is from the Gulf kingdom. Unlocking at least some of that capacity carries complications such as pumping from a disputed neutral zone with Kuwait.
A figure close to the Saudi royal court wrote angrily that the market couldn’t “rule out the price jumping to $100 and $200 a barrel or maybe double that figure.” That isn’t in the cards, but even a less-accommodative Saudi response to any shortfall with Iran could put upward pressure on prices in coming months.
Write to Spencer Jakab at [email protected]
