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ReutersLONDON (Reuters) – Saudi Arabia's threat to sell its oil in currencies other than the dollar if the United States adopts anti-OPEC legislation is futile, but it illustrates the magnitude of the tensions between both governments on oil prices.
Senior Saudi officials have discussed a plan to stop the billing of oil in dollars and switch to other currencies if the Cartels Without Production and Export of Oil (NOPEC) Act, recently introduced in the United States. Congress, enters into force.
The threat was communicated to senior officials in Washington and leaked to signal the strength of the kingdom's opposition.
Billing oil sales in euros or yuan would aim to damage the status of the US dollar as a petro-recycling currency and the status of its reserve more generally, by weakening its value and targeting the financial dominance of the United States. United.
In practice, the threat is not credible since the kingdom depends almost entirely on the United States for its security, including its arms and training purchases, training, intelligence sharing and support for the conflict in Yemen .
The kingdom could not afford to compromise its security relations and its close ties with the current US administration.
But this illustrates the tension that has developed between the kingdom and the United States, especially the White House, facing the desirable level of oil prices.
These tensions are likely to intensify as the United States prepares for the November 2020 legislative and presidential elections.
The leaders of Saudi Arabia and the White House are more than ever aligned on most issues – especially in their joint commitment to confront Iran.
Saudi Arabia is at the heart of the regional security system that the US administration is trying to put in place to contain Iran's influence in the Middle East.
In turn, Saudi Arabia has become increasingly dependent on the United States for its internal and external security, as its conflict with Iran intensifies, both in terms of diplomacy and in proxy wars in the region.
The US and Saudi governments need each other. On the question of oil prices, however, both disagree.
US President Donald Trump has made it clear that he wants oil prices to remain below $ 70 a barrel in a series of posts posted on Twitter and aired in television interviews.
Saudi Arabia, on the other hand, needs more than $ 70, and probably more than $ 80, to consolidate the finances of its government, finance an expensive economic transformation and stem the deterioration of its balance of payments.
Like most first term presidents, Trump's top priority must be re-elected. All other political considerations will be subordinated to this objective.
The president rightly calculated that his marginal voter next year will be a motorist from the Midwest. He therefore needs moderately low gas prices, at least until after polling day.
So far, the NOPEC bills introduced in the US House of Representatives and the US Senate have made little progress and the administration has adopted a lenient attitude towards them.
However, if oil prices reach $ 80 or more, bills could begin to advance further in the legislative process as lawmakers respond to pressure from their constituents.
As prices rise and election day approaches, the NOPEC legislation will be promising.
At $ 85- $ 90, the Congress will take more attention. At $ 90 or $ 95, the bill could be sent to the president's office. And between $ 95 and $ 100, the president could order the Attorney General to institute legal proceedings.
Saudi Arabia does not know if the president will sign or veto a NOPEC bill if it was approved by both chambers and presented to him.
In fact, it is in the President's interest to maintain a constructive ambiguity, as it provides a useful source of leverage to ensure that Saudi Arabia cooperates in its re-election efforts.
When oil prices are high and rising, the president could demand an increase in production and lower oil prices in exchange for a veto on the bill. Speech
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