A Secret, Failed Oil Deal: How the U.S.-Saudi Relationship Ruptured the Middle East
As the Trump administration and the Saudi regime intensify their efforts to find a non-confrontational solution to the Iran nuclear agreement, a closer look reveals that the White House is prepared to push for Saudi Arabia to allow the U.S. to sell Saudi oil at preferential rates to other countries.
By John V. Whitehead
When President Trump called Salman in July to congratulate him on becoming Saudi Arabia’s crown prince, there was a sense of hope among Saudis and ordinary people everywhere that the U.S. would be more friendly toward Saudi Arabia after Trump became president. It’s a sentiment the Saudi rulers and their U.S. supporters share.
Saudi Arabia is one of the top customers for America’s energy exports, but Saudi-American business relations have long been strained. That’s due not only to the Saudi monarchy’s strict conservative laws and intolerance toward non-Muslims but also to the fact that Riyadh has largely blocked American entry into its oil markets since the early 1970s.
The Trump administration has tried to change that, and the Trump administration’s top officials are now negotiating a possible deal to improve relations. On the surface, this deal is a victory for Trump and his Saudi friends. It is also a defeat for American oil companies, because the Saudis will almost certainly demand market rate pricing to sell their oil to the United States.
The Trump administration and the Arab Gulf states have been able to turn the tables on Riyadh by convincing the Saudis to allow the United States to sell Saudi oil at “revenue-supported rates”—what the Saudis call “market rates”—in return for some help in pushing forward the deal to replace the Iran nuclear deal. The Saudis may not like that plan—although the U.S. and Saudi Arabia have been allies for decades—but they are not so desperate that they would sacrifice American oil for market-rate prices for fear of offending Trump