Oil-Rich Saudi Doubles Import Of Russian Oil – How Crown Prince & Putin Play The U.S. And Europe Like A Fool

Oil-Rich Saudi Doubles Import Of Russian Oil – How Crown Prince & Putin Play The U.S. And Europe Like A Fool



Joe Biden’s fist bump with Saudi Crown Prince Mohammed bin Salman, popularly known as MBS, was such a disaster that the U.S. president probably wished he hadn’t made the trip to the Middle East. It was a trap from the beginning to not only humiliates the most powerful man on planet Earth, but also to legitimize the brutal murder of Jamal Khashoggi.



Unlike Trump’s visit where the Saudi King Salman, despite his health problem, was waiting on the tarmac to welcome him, the highest ranked official sent to receive President Biden was Khalid bin Faisal Al-Saud – the governor of Mecca province. Trump was even given 83 gifts, including a traditional sword dance by the Saudi King, as well as a fly-by of Saudi Air Force jets, all of which Biden received none.



When Biden eventually met the Saudi crown prince, both of them greeted each other with a fist bump and no smiles. It was the moment Saudi had been waiting for as the kingdom’s journalists were given one simple task – snap the photos and quickly share the image around the social media to ensure everyone saw it. The fist bump was instantly criticized as shameful in the U.S.



During Biden’s first year in office, he refused even to speak with MBS, the de-facto leader of the kingdom. The president then released CIA’s (Central Intelligence Agency) conclusion that the crown prince had ordered the 2018 murder of journalist Jamal Khashoggi. It was only 2 years ago in 2020 when Biden promised to make a pariah out of Saudi over the gruesome murder.



Now that the half-baked economic sanctions imposed on Russia fail to defeat Putin, the U.S. president reluctantly rushed to the same pariah state, begging for oil when there are tonnes back home ready to be pumped. But did Biden get what he wanted, despite shamelessly “kowtow” to the murderer he had previously promised to punish? Sadly, Sleepy Joe was being fooled.



Despite some Western news media cheering Saudi’s promise to raise production capacity to 13 million barrels per day, the actual story is quite pathetic. Addressing a U.S.-Arab summit in Jeddah attended by Biden, MBS told the American president in his face that Saudi could only increase to 13 million from current 12 million by 2027 because the kingdom claims it has no more capacity beyond that.



Yes, when the U.S. and Europe desperately need help from OPEC to pump millions of barrels more to offset the threat from Russia, Saudi could only promise additional 1 million barrels. Even then it would take another 5 years till 2027 to achieve it. If even the “central bank” of global oil has limited capacity to pump more oil, how do you expect the West to win the Ukraine war against Russia?



Russia is the world’s third largest oil producer behind the United States and Saudi Arabia. In January 2022, before the Ukraine invasion (February 24), Russia’s total oil production was 11.3 million barrels per day. But at the same time, Russia is the world’s “largest exporter” of oil to global markets – about 60% goes to Europe and 20% for China.



Clearly, Saudi’s extra 1 million barrels could hardly make a dent on Russia. Analysts and economists have warned that further bans could boost oil prices to as high as US$175 a barrel. JP Morgan warns that if Putin retaliates by cutting 3 million barrels per day, the oil price would shoot to US$190. A cut of 5 million barrels could see oil price skyrockets to US$380.



With tail between legs, Biden returned home empty-handed. Crude oil prices remain above US$100 a barrel. His pledge to prevent Russia, China, and Iran from filling the vacuum and dominating the Middle East was seen as empty rhetoric. The region’s leaders appeared to have lost confidence in the U.S. following the defeats in Afghanistan and now in Ukraine.



Biden won’t send a single American soldier to Ukraine to fight Russia. Worse, even the weapons he sent to Ukraine are being stolen and sold in the black market. For the first time, the Middle East has a choice and chooses not to obey the U.S. like it previously did. The Arabs can hedge their bets and extract the best of both worlds – U.S. and China-Russia.



Here’s the best part – Saudi has more than doubled its imports of Russian oil between April and June. Reuters data showed Saudi imported a whopping 647,000 tonnes (48,000 barrels per day) of fuel oil from Moscow during the period. It was a slap in the face of the U.S. and E.U. at a time when the West was trying to isolate Russia and cut its energy export revenues.



Apparently, Russia’s discounted fuel oil is so cheap that Saudi does not need a rocket scientist to tell it to import the Russian fuel to feed its power stations during the summer cooling demand, and free up its own crude for export. The Saudis have been importing Russian oil through Egypt. Heck, even Egypt imported 70,000 barrels per day from Russia in June.




Besides Egypt, Saudi also imports more Russian oil via the Middle East oil hub of Fujairah in the UAE (United Arab Emirates). So far, Fujairah has received 1.17 million tonnes of Russian fuel oil. This month alone (July), the hub could receive an additional 0.9 million tonnes, bringing the total to 2.1 million – exceeding the 1.64 million tonnes for the whole year of 2021.

In fact, Bloomberg reported that Russian shipments of oil products to the Middle East hit their highest level in 6 years in June, while deliveries to Europe fell by 30%. The Arab world imported a staggering 155,000 barrels of Russian fuel per day in June. Russian deliveries – mainly gasoline, jet and diesel fuel, and other petroleum products – are expected to exceed 220,000 barrels per day in July.



Meaning while the U.S. and European Union have blacklisted Russian oil, Moscow sold it at a steep discount to friendly countries like China, India, Egypt and even Saudi Arabia. Then, Saudi sells its own oil at market price to Europe, making handsome profits. So, Saudi gets cheap Russian oil in his left pocket, and sells oil from his right pocket to E.U. at high market prices.



In fact, to make Saudi appears pump more oil, it just needs to buy more Russian oil and sell the same amount of its own oil to the West, and voila, both Putin and MBS laugh all the way to the bank. That’s how easy Saudi helps Russia evades the American sanction or boycott. And there’s nothing the U.S. or Europe could do to punish the Arabs, even if they knew it.



The fact that many large Saudi cities are too far from natural gas fields make it more feasible – both economically and logistically – to depend on Russian fuel oil for its power grid. The kingdom typically needs 600,000 barrels per day during the summer and about 300,000 barrels per day during the winter. It reduces the need to refine crude, leaving Saudi with more unrefined crude to sell on the international market at higher prices.



Saudi has maintained its cooperation with Russia in OPEC+, an alliance of global oil producers. Both Saudi and Russia are the de-facto leaders of respectively OPEC and non-OPEC producers in the OPEC+. Together, they control the global oil prices like a cartel. The U.S. is not part of OPEC+ hence is considered an outsider. So, why should Saudi care about American inflation?



To make matters worse, the U.S. arrogance of power in pushing for the expansion of NATO eastward, which ultimately triggered the Ukraine war has also seen Beijing buying more oil from Moscow, so much so Russia has reclaimed its position as China’s biggest oil supplier, overtaking Saudi as early as May. Chinese imports of Russian oil have skyrocketed by 55%.



Like China, India’s crude oil imports from Russia have also jumped over 50 times since April, making 10% of the country’s crude import. Before the Ukraine conflict, Russian oil constituted just 0.2% of India’s total oil import. Indian refiners bought about 25 million barrels of Russian oil in May alone. Last month, Russia overtook Saudi Arabia to become India’s second-biggest supplier of oil.



India, the world’s third-biggest oil-importing and consuming nation, has defended purchases of crude oil from Russia despite criticisms from the U.S. and E.U. Lecturing the West, India said what it buys from Russia in a month is less than what Europe buys from Russia in an afternoon. Again, there’s nothing the U.S. could do to stop its ally India from buying discounted Russian oil.



Moscow is also moving away from the U.S. dollar, asking for payments to be settled in UAE dirhams from Indian refiners. India central bank has already introduced a new mechanism for international trade settlements in rupee, a move many analysts see as the beginning of de-dollarization. Washington could only urge New Delhi not to buy too much Russian oil.



As Saudi diverts more of its crude oil exports to Europe, it is sending less to top customers in Asia. Hence, as Russian overtook the kingdom as China’s biggest oil supplier, the Chinese imports of Saudi crude in June were down 30% compared to last year. In reality, the shift in oil trade patterns means Saudi and Russia are merely exchanging their major customers to look as if Europe no longer relies on Russian.



Because oil has no serial numbers or other tracking mechanism, how do you know that the oil sold by Saudi Arabia or UAE to Europe and the U.S. actually originated from the Middle East, and not Russia oil bought earlier by the Arabs? One can comically say the Saudis are helping Putin in laundering Russian oil so that the West thought they were buying pure Arab oil.



About 6 days after Biden visited Saudi, Russian President Vladimir Putin and Saudi Crown Prince spoke on the phone to talk about the importance of further cooperation within OPEC+. Sources told Reuters that Riyadh had consulted Moscow before agreeing to hike the production to 13 million barrels by 2027 – suggesting that Putin knew everything and Russia-Saudi was playing Biden.