Saudi Arabia's energy minister held on Friday a virtual meeting with his Chinese counterpart to discuss cooperation in the global oil market and on nuclear energy, the Saudi state news agency said.
Why it matters: The meeting comes amid a deep crisis between the U.S. and Saudi Arabia over the Saudi-led OPEC+ decision earlier this month to cut oil production by 2 million barrels per day starting in November, despite Biden administration requests not to cut output.
- In response to the decision, the Biden administration announced it is re-evaluating its relationship with Saudi Arabia.
Driving the news: The Saudi energy minister Prince Abdulaziz bin Salman bin Abdulaziz held a video conference call with China’s National Energy Administrator Zhang Jianhua today. One of the key issues discussed was the oil market.
Details: According to the Saudi state news agency, the ministers “confirmed their willingness to work together to support the stability of the international oil market” and stressed the need for “long-term and reliable oil supply to stabilize global market that endures various uncertainties due to complex and changeable international situations."
- The ministers also discussed cooperation and joint investments in countries that China sees as part of its strategic “Belt and Road” vision. The development projects discussed by Biden during his trip to Saudi Arabia were supposed to be a counterweight to China’s plan in the region.
- They also discussed continuing to implement an agreement between China and Saudi Arabia about peaceful uses of nuclear energy. One of the arguments of the Trump administration for cooperation with Saudi Arabia on nuclear energy was to prevent Saudi-Chinese cooperation on the issue.
- The ministers also discussed cooperation in the fields of electricity, renewable energy and clean hydrogen, topics also discussed during Biden’s trip to Saudi Arabia.
Between the lines: "The statement that Saudi Arabia and China are committed to strengthening their cooperation in the energy sphere is a clear rebuke aimed at Washington," oil analyst Ellen Wald, president of Transversal Consulting, tells Axios via email.
- Wald notes Saudi Arabia is often China's largest oil supplier and Saudi Aramco, the state oil giant, also has multiple joint ventures with Chinese companies in refining and petrochemicals.
- "This statement doesn't indicate any new policies, but is designed to remind the Biden administration that Saudi Arabia has other important energy relationships and that Saudi oil policy does not come from Washington — it comes from Riyadh," she said.
The big picture: White House officials stressed ahead, during and after Biden’s trip to Saudi Arabia last July that one of the administration's goals was to maintain U.S. leadership in the Middle East and prevent China and Russia from gaining influence.
Yes, but: Oil analyst Bob McNally, president of Rapidan Energy Group, cautions against reading too much into the Saudi-China meeting and statement.
- He noted in an email exchange with Axios that Saudi Arabia, China and other actors are all bracing for turmoil in oil flows and prices "arising from the clash between looming recession and geopolitical disruption risks."
- "Their bilateral relationship has been deepening for years and not too surprising that they're exchanging compliments and vowing to work together during these unusually volatile and risky times," said McNally, who was a senior energy aide in the George W. Bush White House.
- And Wald notes "even though China is Saudi Arabia's most important customer, it cannot replace the military and diplomatic role the U.S. plays in the Middle East and specifically in ensuring Saudi security."
