US, WASHINGTON (ORDO NEWS) — There are calls in the US government to influence the current conflict that erupted between Russia and Saudi Arabia and led to a sharp drop in oil prices. Including among the discussed there is a proposal to introduce new sanctions against Russia.
However, the Forbes columnist strongly advises the States not to do this, and outlines 6 reasons for this.
In the US, they are increasingly saying that Washington needs to intervene in the current situation with an oversupply of oil products and low oil prices, writes Forbes columnist Ellen Wald.
So, recently a group of lawmakers wrote directly to the Saudis, urging them to reduce production, and the day before, a letter calling for putting pressure on Russia was received by Donald Trump. According to the author of the article, all this already looks strange, given that recently OPEC was criticized in the States for such manipulations.
Moreover, the Wall Street Journal published an article stating that the government is considering various options for responding to the current situation, including new sanctions against the Russian oil industry and diplomatic steps towards Saudi Arabia.
However, the author of the article warns: it is one thing to conduct diplomacy with Saudi Arabia or Russia. But taking tough measures so that other countries reduce their supplies is completely different. And Ellen Wald gives six reasons why the States should not take sanctions, impose embargoes and other harsh measures.
First of all, if such measures are taken, then their goal is to protect American industry, and not to prevent violations of treaties or human rights by another country. So US partners can then lose confidence in them. In addition, this could lead to WTO anger in the United States, and it will become harder for the States to criticize, for example, China for trade violations.
Secondly, the United States already has sanctions against Venezuela and Iran, as well as partially against the Russian oil industry. Typically, such sanctions are applied against third parties so that they do not deal with the object of sanctions. So new measures may piss off these third forces even more, and countries may begin to ignore US sanctions policies.
Saudi national company Saudi Aramco owns Motiva, the largest US refinery. So if the United States takes measures against the import of Saudi oil, then Motiva may also close completely or partially. Saudi Arabia may reduce gas supplies to the United States, domestic prices will rise, and this will hit Trump himself, who will soon have an election, the author recalls.
Fourth, there were proposals to impose an oil embargo on OPEC countries. But in this case, the States will deprive themselves of the supply of heavy oil, which oil refineries need in order to mix it with oil that is produced in the United States.
Fifth, the oil industry as a whole is characterized by price fluctuations. Now the prices are low, and this is bad for business, investors and employees, but in the end the prices will straighten, everything will return to its former tracks. Such fluctuations are normal in this area, the author of the article notes, urging the American government to believe more in American industry.
Finally, the US oil market is constantly changing, and the government cannot afford to make harsh decisions based on the situation only at the moment. For example, 10 years ago, the United States produced little oil and fuel prices were high, the government took measures to produce more. So it is not known how the situation will turn in 2030, writes the Forbes columnist.
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