Four sources familiar with the developments told Reuters that Trump told Saudi Crown Prince Mohammed bin Salman in a phone call on April 2 that if the Organization of the Petroleum Exporting Countries did not start reducing oil production, he would not be able to prevent Senators from enacting legislation to withdraw American forces from the kingdom.
Nothing has been published about this threat to end the strategic alliance that began 75 years ago.
This threat was central to the American pressure campaign that led to a historic global agreement to reduce oil supplies at a time when demand collapsed due to the Corona pandemic and recorded a diplomatic victory for the White House.
Trump sent his message to the Saudi crown prince ten days before the announcement of production cuts. An American source who was briefed by senior administration officials on the dialogue said that the crown prince was surprised by the threat that he even ordered his aides to leave the room so that he could continue the dialogue in secret.
The move underscored Trump’s strong desire to protect the US oil industry from a historical price collapse at a time when governments have stopped economic activity around the world to fight the Corona virus.
It also reflected a significant reversal by Trump of his long-standing criticism of the oil bloc that the US president was attacking because he raised energy costs to Americans with production cuts that usually raised gasoline prices. Now Trump himself has asked OPEC to cut production.
A senior US official told Reuters that the administration had informed the Saudi leaders that if production was not cut, “there would be no way to prevent the US Congress from imposing restrictions that might lead to the withdrawal of American forces.”
The official summed up the content of the American argument that was conveyed through various diplomatic channels as a message to Saudi leaders that “we defend your industry while you are destroying our industry.”
Reuters asked Trump about the talks in his interview on Wednesday night at the White House in which the president addressed a number of issues related to the pandemic. Asked if he had informed the Saudi crown prince that the United States might withdraw its forces from the kingdom, Trump said, “There was no need for that.”
“I thought (their positions) and President Putin, Vladimir Putin, were very reasonable. They knew they had a problem and then it happened.”
Trump was asked about what Crown Prince Muhammad said: “They were having difficulty concluding an agreement. I met him on the phone and we were able to reach an agreement “on production cuts.
The Saudi government’s media outlet did not respond to a request for comment. A Saudi official, who asked not to be named, stressed that the agreement represents the will of all countries in the OPEC + oil producing group that represents OPEC and a Russian-led coalition.
“Saudi Arabia, the United States, and Russia played an important role in the OPEC + agreement to cut oil, but it would not have happened without the cooperation of the 23 countries that participated in the agreement,” said the Saudi official, who declined to comment on the discussion between US and Saudi leaders.
A week before Trump’s call to Prince Muhammad, Senator Kevin Kremer and Senator Dan Sullivan, Republicans, have proposed legislation to withdraw all US forces, Patriot missiles, and anti-missile defense systems from the kingdom unless Saudi Arabia cuts oil production.
The proposal was receiving increasing support amid anger in Congress over the oil price war that broke out between Saudi Arabia and Russia at a bad time. The kingdom launched production in April and flooded markets with crude oil after Russia refused to increase production cuts, in line with a previous agreement with OPEC to cut supplies.
On April 12, under pressure from Trump, the world’s largest oil producer outside the United States agreed to the largest production cut ever. OPEC, Russia and allied producers have cut production by 9.7 million barrels per day, or about ten percent of global production.
The source of half of this amount was cuts of 2.5 million barrels per day by Saudi Arabia and Russia, which depend on oil and gas revenues to finance their respective budgets.
Despite an agreement to reduce a tenth of global production, oil prices continued to decline to historic low levels. US crude futures fell below zero last week when sellers were forced to pay money to buyers to avoid receiving oil that they had no capacity to store.
The Brent mix fell in futures trading, approaching $ 15 a barrel, a level that has not been witnessed by the markets since the collapse of the oil price in 1999 after its price at the beginning of the year was $ 70.
However, a supply cut deal could eventually lead to higher prices when governments around the world begin to resume economic activity and fuel demand rises as travel traffic grows.
Whatever the outcome, the negotiations represent an extraordinary show of American influence over world oil production.
Senator Kremer told Reuters he had spoken with Trump about legislation to withdraw US forces from Saudi Arabia on March 30, three days before the president called Prince Mohammed.
Asked if Trump had said to Saudi Arabia that it might lose US military support, US Secretary of Energy Dan Browell said the president had the right to use all available tools to protect American producers, including “our support for their defense needs.”
The strategic partnership between the two countries dates back to 1945 when he met President Franklin D. Roosevelt and Saudi King Abdulaziz bin Saud on board the American cruiser Quincy.
The two reached an agreement providing US military protection in exchange for taking advantage of Saudi oil reserves. Today, the United States has about three thousand troops in the kingdom, and the US Fifth Fleet is protecting oil exports from the region.
Saudi Arabia relies on the United States for arms and protection from regional opponents such as Iran. However, the kingdom’s weaknesses were exposed late last year in an attack by 18 drones and three missiles on major Saudi installations.
The United States held Iran responsible and Tehran denied any role in the attack.
– 13 angry members of the Senate –
Trump initially welcomed the drop in oil prices and said cheap gasoline prices were equivalent to a tax cut for car owners.
The situation changed after Saudi Arabia announced in mid-March that it would produce a record amount of 12.3 million barrels per day, which sparked a price war with Russia.
The flood of supplies came at a time when governments around the world ordered people to stay in homes, which crushed the demand for fuel and made it clear that American oil companies would be badly hurt in the collapse of oil prices.
The members of the Senate rebelled in the oil-producing states.
On March 16, Senator Kremer was one of 13 Republican members of the Senate to send a letter to the Saudi crown prince reminding him of the kingdom’s strategic dependence on Washington.
The group also urged Commerce Minister Wilbur Ross to investigate whether Saudi Arabia and Russia were violating international trade laws by flooding the US market with oil.
On March 18, this group of Senators, including Senator Sullivan from Alaska and Senator Ted Cruz from Texas, made a rare phone call to Princess Reema Bint Bandar bin Sultan, the Kingdom’s ambassador to the United States.
Kramer described the dialogue as “harsh” as each senator explained the damage to the oil industry in his state.
“I heard that from every member of the council, and none of them declined,” Kramer told Reuters.
The Saudi embassy did not respond to requests for comment.
Kramer said that the princess conveyed their comments to officials in Saudi Arabia, including the Minister of Energy. The Senators told the princess that the kingdom faced escalating opposition in the Senate to the Saudi-led coalition fighting a war in Yemen against the Houthis.
Saudi and US officials say the Houthis are armed by Iran, and Tehran denies this. Last year, the importance of Republican Senators’ support for Saudi Arabia in Yemen proved important.
The Senate endorsed Trump’s objections to several proposals to end US arms sales and other forms of military support to Saudi Arabia, amid feelings of anger over the conflict in Yemen that has caused more than 100,000 deaths and led to a humanitarian crisis.
Kremer said he telephoned Trump on March 30, nearly a week before he and Senator Salifan proposed a bill to withdraw US forces from Saudi Arabia.
Kramer added that the President called him back on the same day in the presence of Energy Secretary Brouillet, senior economic advisor Larry McDowell and US Trade Representative Robert Lighthizer.
“I said that the only person who did not share the call and who could have been very helpful was Mark Esper,” Defense Secretary. Kramer added that he wanted to address the issue of how American military assets in Saudi Arabia might be moved to other places to protect American forces.
– Submission –
Trump’s oil diplomacy came in a series of calls with King Salman of Saudi Arabia, Prince Muhammad, the crown prince, and Russian President Vladimir Putin from mid-March.
The Kremlin confirmed the talks between Putin and Trump and said they also discussed oil production cuts and the Corona pandemic.
The source familiar with what took place in the April 2 call to Prince Muhammad said Trump told the Saudi prince that he would abandon them the next time he backed Congress a proposal to end Washington’s defense of the kingdom.
Trump also publicly threatened in early April to impose duties on oil imports from Saudi Arabia and Russia.
After the call with the Saudi crown prince and another call on the same day with Putin, Trump launched a tweet in which he said he expected Saudi Arabia and Russia to cut production by about ten million barrels per day.
Later, Riyadh and Moscow confirmed that they had resumed negotiations.
On April 3, Trump hosted a White House meeting attended by Senators Kremer, Cruz, Sullivan and executives from oil industry companies including Exxon Mobil, Chevron, Occidental Petroleum and Continental Resources.
During the open part of the call, Kramer told Trump that Washington could use the billions of dollars it spends to defend Saudi Arabia on other military priorities “if our friends would treat us this way”.
A Middle East diplomat told Reuters that the prospect of losing American military protection made the royal family comply with Trump’s demands.
After long, faltering negotiations, major producers pledged to cut record supply cuts by 9.7 million barrels per day in May and June, on the understanding that economic factors would cut about another ten million barrels per day of production from other countries, including the United States and Canada.
Trump praised the deal and portrayed himself as the mediator. He said in a tweet after the agreement, “Since I was a party in the negotiations … the number that OPEC + is looking to reduce is 20 million barrels per day.”
Riyadh also attributed credit to itself, and Energy Minister Prince Abdulaziz told Reuters at the time that the crown prince had a major role in drafting the agreement.
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