Analysis: They still need us, UAE tells US while flexing Gulf oil muscles

US President Joe Biden holds a virtual meeting with business leaders and state governors on March 9, 2022 at the White House campus in Washington, United States, to discuss supply chain issues, particularly those related to semiconductor chips. REUTERS/Jonathan Ernst

DUBAI, March 10 (Reuters) – By single-handedly shedding 13% of skyrocketing oil prices in one day this week, the UAE demonstrated Gulf producers’ power in the market and sent a wake-up call to Washington to pay closer attention to its longtime allies.

OPEC heavyweights Saudi Arabia and the United Arab Emirates, both of whom bear a grudge against Washington, have dismissed US pleas to use their idle production capacity to tame runaway crude oil prices, which have sparked a global tide following Russia’s invasion of Ukraine threatened recession.

Wednesday’s sharp drop in oil prices, the biggest one-day drop in almost two years, followed comments from the United Arab Emirates’ ambassador in Washington, who said his country supports pumping more oil.

Prices rallied when the UAE’s energy minister contradicted him, saying the Gulf state was sticking to a production pact agreed with OPEC+, which brings together the Organization of Petroleum Exporting Countries and its allies, including Russia. Continue reading

“This was intentional,” Gulf Research Center chairman Abdulaziz Sager said of the UAE’s conflicting comments, adding that the message sent to Washington was: “You need us, we need you, so let’s break the issues between.” settle us.”

He said Washington, which announced Russia’s plans to invade Ukraine long before Moscow troops crossed the border on February 24, should have coordinated the build-up more closely with Gulf producers rather than turning to them as soon as the crisis hit.

“The Gulf States have developed good relations with Russia over many years, they cannot simply upset things,” he said.

The United States wants the Gulf to side with the West in the Ukraine crisis, but Washington has undermined its political capital with Riyadh and Abu Dhabi by ignoring its concerns about regional rival Iran, its support for theirs War in Yemen ended and US imposed conditions on arms sales to Gulf countries.

REBUILDING TRUST

Saudi Crown Prince Mohammed bin Salman was outraged by President Joe Biden’s refusal to deal directly with him as the kingdom’s de facto ruler over the 2018 assassination of Saudi journalist Jamal Khashoggi. A US intelligence report implicated the prince, who denies any role. Continue reading

“There are many issues between the US and its Gulf allies that need to be comprehensively addressed and resolved,” said a Gulf source, saying trust needs to be rebuilt. “It has nothing to do with Russia or the Ukraine war.”

The source said Washington should have acted before the Russian invasion. “The US government knew it was headed for a crisis. It should have strong relationships with its allies, coordinating and setting them up in advance… and not just expecting them to follow oil prices.”

Distrust has been building since the 2011 Arab uprisings, when Gulf rulers were shocked at how President Barack Obama’s administration abandoned the late Egyptian President Hosni Mubarak after a 30-year alliance, dumping him and Gulf rulers’ concerns about the Muslim Brotherhood ignored the rise.

Sunni Muslim Gulf states, too, felt caught off guard when Washington reached a nuclear deal with Shia Iran in 2015 that failed to address Gulf concerns about Tehran’s missile program and regional proxies in Yemen, where Gulf neighbors were at war, and Lebanon deep in the crisis.

Saudi Arabia felt particularly scorned in 2019, when missile and drone strikes on the kingdom drew a lukewarm US response, though both Riyadh and Washington blamed Tehran. Iran denied playing any role.

The United Arab Emirates were equally frustrated in January when Yemen’s Houthis launched attacks on Abu Dhabi. Though the UAE is urging Biden to re-label the Iran-backed group a terrorist, Washington has yet to do so. Continue reading

PHONE SNUB

The Gulf source and another source familiar with the matter told Reuters that Biden had angered the UAE’s de facto ruler, Abu Dhabi’s Crown Prince Mohammed bin Zayed, known as MbZ, by not making a quick phone call after the Houthis had struck.

“Biden called him three weeks later. MbZ did not answer the call. Your ally is being attacked by a terrorist and you’re waiting three weeks to call?” the Gulf source said.

White House National Security Council spokeswoman Emily Horne said on Wednesday there had been “no problems getting a call” and that Biden would speak to the UAE leader soon. A spokesman for the UAE Ministry of Foreign Affairs said a call was planned.

Last month, Biden spoke to Saudi King Salman while the crown prince, known as MbS, was in the room. Sources said Biden asked to speak to the crown prince but MbS declined because the call was only scheduled to be with the king.

The White House and the Saudi government did not immediately respond to a Reuters request for comment on the episode. The White House said at a briefing Monday that there were no plans for Biden to call MbS “at this time.”

The Ukraine crisis erupted as the United States, Russia and other world powers held talks to revive the Iran nuclear deal. But Moscow may have dashed those efforts for now by demanding guarantees from Washington that Western sanctions against Russia will not affect its deals with Iran.

Gulf countries have long felt their concerns have gone unaddressed in these talks, fearing a deal will empower Iran and its regional proxies.

The Gulf States are likely to still side with the United States, on which they depend for their security, because of their energy and economic ties with Russia.

“Ultimately, the US has influence, but the resistance level of the Saudis and Emirates is particularly high right now, given their deep dissatisfaction with US policy towards them,” said Neil Quilliam, Associate Fellow at Chatham House.

Reporting by Samia Nakhoul, Ghaida Ghantous and Maha El Dahan in Dubai and Aziz El Yaakoubi in Riyadh; Additional reporting by Jarret Renshaw and Steve Holland in Washington; Editing by Edmund Blair

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