China Stopped Buying U.S. Oil. Should We Shut Off Saudi Spigot?

      Published on Wednesday, 12 December , 2018      1809 Views     
China Stopped Buying U.S. Oil. Should We Shut Off Saudi Spigot?

  • World News

China hasn’t bought a drop of U.S. oil for the last three months, just two months after a record-setting $1 billion in shipments.

It’s part of China’s response to U.S. tariffs in the trade war being choreographed by President Xi Jinping and President Trump.



Which raises a rather simple question: Should Trump take one from the Xi playbook and do the same to Saudi Arabia?

Could he stop U.S. oil purchases from Saudi Arabia to show the United States’ displeasure with its de facto ruler Crown Prince Mohammad bin Salman and his all-but-certain orchestration of the murder of a U.S. resident, Jamal Khashoggi, while in Turkey and the Middle Eastern nation’s continued bombing of civilians in neighboring Yemen. Short answer: Of course.

There’s even a relatively straightforward way to replace that oil, at least in theory, political considerations aside.

Most of us don’t agree on a lot of things involving President Trump but one thing we can all concur on is the president’s willingness to say and do almost whatever he pleases, whenever it pleases him. His supporters love him for it. It drives his detractors crazy.

Trump, the self-proclaimed Tariff Man, wasn’t shy about tossing steel and aluminum tariffs at heretofore-presumed-allies like Canada on national security grounds. He has been willing to hint at imposing steep tariffs on German auto imports because of displeasure with the size of the U.S. deficit. He has imposed global tariffs on washing machine imports to support U.S. multinational Whirlpool against the onslaught from South Korean multinationals LG and Samsung.

And, of course, he is now threatening to bump the 10% tariffs in place against China to 25% if there is no agreement between the two nations before March. (And just as a reminder, we are in free trade agreements with Canada and with South Korea.)

YOU MAY ALSO LIKE

Here’s one of the thorny issues: If we don’t punish a foreign government for almost-certainly ordering the murder of a U.S. resident, can the rest of the world’s national leaders assume they can act with impunity in the future?

Against that backdrop, let’s take a look at the data.

China is the second-largest purchaser of U.S. oil, behind Canada, accounting for 20% of the total last year, 14% year-to-date through October.

Saudi Arabia is the second-greatest source for U.S. oil imports, behind Canada, accounting for 13% of the U.S. total his year.

Next, where is the hue and cry from China shutting off the spigot on U.S. oil purchases? Well, it’s perhaps possible for the oil exporting industry to have barely noticed it is happening. U.S. oil exports are surging this year, up 141.8%, and have advanced from being the nation’s 11th most valuable export in 2017 to the third for the month of October.

Which leads to Saudi Arabia. What hue and cry would result if Trump decreed that the United States was going to stop buying oil from Saudi Arabia? He could spell out the conditions for a resumption.

Let’s look at the data again:

The United States has exported $32.64 billion in oil this year, up from $13.5 billion through the first 10 months of 2017. That’s an increase of $15.14 billion. Keep that last number in mind.

We have imported $17.5 billion from Saudi Arabia this year. Not a big difference between just the increase in U.S. oil exports and total Saudi imports.

While I haven’t seen much reticence from President Trump to lean on Canada and Mexico, our first- and third-ranked suppliers of oil, respectively, I am betting that the United States could cover the value of those Saudi imports it without their help. Simply sell more U.S.-produced oil domestically. Metaphorically speaking, turn those ships around.

Other than economists and trade-policy experts who might decry this as sheer lunacy, or fret about the always fragile oil markets, I am not sure who would object. Trump might even see that as an arrow in his quiver, or at the very least a distraction for whatever might be pestering him at the moment. I’m betting he would find support in Congress. There has been broad bi-partisan outrage at the murder and, increasingly, concerns over the attacks on Yemen.



While a more traditional approach might be to expel the Saudi ambassador or something similarly diplomatic in nature, President Trump has shown that he likes to use less-traditional approaches. This would qualify. The only problem is that he seems to be quite comfortable with Saudi Arabia and MBS, more comfortable than he seems to be with leaders of our allies, who all too often on the receiving ends of personal attacks, and the opinions of his intelligence agencies.


Category World News | 2018/12/12 latest update at 9:00 PM
Source : Forbes | Photocredit : Google
1810 Views
Comments Add comment



Related Articles

The editorial staff of Saudi Arabia Today would like to give all of its readers from Gulf and Saudi Arabia and the whole world the opportunity to participate actively in the development of the website! If you have something interesting, fun, scandalous - just something worth to be seen from more people. Capture it and share it in the Saudi Arabia Today with a short text.

Do you have information you want to reach our readers?

Send article/s

You can subscribe to our Facebook, Twitter and Google pages or use our RSS feed channel to always read the most important news about Saudi Arabia, the Gulf and the world.


Sponsored Publications



Pakistan PM criticized for ‘insulting’ encounter with Saudi Arabia’s King Salman King

Pakistan PM criticized for ‘insulting’ encounter with Saudi Arabia’s King Salman

The prime minister of Pakistan is facing a social media furore for allegedly disrespecting the king of Saudi…

Join efforts to fight terror, King Salman urges Muslim leaders King

Join efforts to fight terror, King Salman urges Muslim leaders

Custodian of the Two Holy Mosques King Salman opened the 14th summit of the Organization of Islamic Cooperation…

Makkah summit supports Palestinians, backs Saudis amid Iran tensions King

Makkah summit supports Palestinians, backs Saudis amid Iran tensions

A Saudi-hosted Islamic summit on Saturday threw its support behind Palestinians ahead of a US-led peace plan suspected…

Saudi King Salman calls for tolerance, moderation in Ramadan message King

Saudi King Salman calls for tolerance, moderation in Ramadan message

Saudi Arabia’s King Salman bin Abdulaziz al-Saud on Sunday has called for a message of tolerance and moderation…

GULF TV

Popular in GULF TV

PIRELLI “DREAMING” – THE CAL 2019 making of Full Version | Fashion Channel

2136 Views

A photographic tale of the aspirations of four women and their determination to achieve their goals, each one…

Latest videos in GULF TV

Events

Lifestyle

Culture

Sport

Science & Technology

Government