Saudi minister asks OPEC to cut oil production

As the international oil relationship between Saudi Arabia and its long-time customer the United States starts to chill, and the dynamics of the world oil market change, Saudi leaders are looking at the future of oil and gas administration through the Organization of the Petroleum Exporting Countries (OPEC).

For decades, Americans have had a close, if reluctant, relationship with OPEC. Much of the world has been dependent on these large oil exporters to provide the energy needed to maintain living standards and grow economies.

But now, with larger U.S. production of oil and gas resources domestically, as well as lower oil prices globally, there is a renewed push towards independence from some quarters in America and other countries that used to rely more on the Saudis for energy exports.

A Nov. 17 press release shows Saudi Energy Minister Khalid al-Falih recommending that OPEC cut oil output to 32.5 million barrels per day in order to “balance the market.”

Al-Falih said the move will benefit both producers and consumers.

Some experts in the U.S. agree -- in an Oct. 3 CNBC article, writer Hadley Gamble applauds Saudi Arabia's resolve to, as the writer says, “give up its battle to maintain market share” at a recent oil summit in Algiers.

Oil producers have all too successfully proven that they can adapt to price shock -- Beebe the balance of the article deals with the challenges facing Saudi Arabia and the ways that the Saudis can pivot away from a national economy based on oil. It also shows more of a political will within the U.S. distance between itself and Saudi Arabia.

How far will Americans go with this new push toward independence?

“It's a really interesting question,” Joe Carella told Gulf News Journal Friday.

Carella is assistant dean of executive education at the University of Arizona and has experience working with executives and professionals in the Middle East.

He said the new change in diplomatic and national international relations isn’t just about Donald Trump suggesting cutting ties with the kingdom.

“Interests between the two nations are quite substantial,” Carella said. “There are defense and economic interests that are aligned.”

On the basis of these ongoing interests, Carella said, it's unlikely that the two countries will simply “walk away” from each other, although clearly the U.S. has increased domestic production.

“There will be multiple interests in play,” he said, citing major U.S. defense companies such as Raytheon and others, which consider Saudi Arabia to be one of their biggest clients.

“The relationship between the U.S.A. and Saudi Arabia goes certainly two ways,” Carella said. “Not only do American companies, defense and oil and gas principally, have substantial investment in the kingdom, but also Saudi companies invest in the U.S.A.: the largest oil refinery is partly owned by Saudi Aramco and energy tech … As the Trump administration delves deeper into the U.S. relationship with the kingdom, I sense that a new era of negotiation and pragmatic diplomacy will prevail.”