U.S. Counters Iran Talks with Saudi Nuclear Deal Strategy
- Following talks with Iran on reviving the nuclear deal, the U.S. began parallel discussions with Saudi Arabia.
- A U.S.-Saudi nuclear deal would reverse Riyadh’s drift toward China, undercutting Beijing’s Belt and Road Initiative and its growing influence in the Middle East.
- The move signals a broader U.S. strategy to reassert dominance in the region through deep energy, infrastructure, and nuclear cooperation.
Just one day after U.S. negotiators met their Iranian counterparts in Oman to discuss drawing up a new nuclear deal (the Joint Comprehensive Plan of Action), Energy Secretary Chris Wright flew into Saudi Arabia to talk about a nuclear deal with the Kingdom as well. Such a deal with Riyadh would place enormous pressure on its historical religious, political and military enemy Tehran to reach an agreement on its own nuclear energy programme with the U.S. sooner rather than later. It would also be pivotal in reversing the decade-long drift of Saudi Arabia away from the U.S. sphere of influence and into that of China. Moreover, if both sides of this diplomatic play successfully bring both Tehran and Riyadh under Washington’s influence, the Middle East could be lost to China for decades to come and effectively end its multi-generational global power-grab project the ‘Belt and Road Initiative’ (BRI).
The scale and scope of last week’s discussions between the U.S. and Saudi Arabia are similar to those that have been seen for years between the Kingdom and China and, as such, can be regarded as a straight replacement option of Washington for Beijing for Saudi Arabia. The Department of Energy discussed working toward a U.S.-Saudi nuclear power agreement as part of a multi-layered memorandum of understanding across multiple energy fields that the two countries are now negotiating. These include deep and broad co-operation on oil and gas, petrochemicals, carbon management, hydrogen technologies, electricity, renewables, and nuclear energy. They also incorporate new deals on infrastructure supporting these developments and on financing to support their swift rollout. “Although [Energy Secretary] Wright stressed that safeguards will be in place to ensure that Saudi’s nuclear programme won’t lead to the development of nuclear weapons, it’s clear to Iranians that such safeguards can just as easily be loosened and that the threat of nuclear-armed Saudi Arabia has suddenly become very real, which is exactly what Washington intended,” a senior energy industry source who has worked closely with Iran’s Petroleum Ministry exclusively told OilPrice.com last week. “The mood has shifted in Tehran following this [U.S.-Saudi Arabia announcement] and they’re [Iran’s leadership] very focused now on getting something done here [on a new nuclear deal],” he added.
Providing Saudi Arabia with a nuclear energy programme was also included in the raft of agreements signed between Riyadh and Beijing since the end of the 2014-2016 Oil Price War that was started by the Kingdom but which ended in economic and political disaster for it, as analysed in full in my latest book on the new global oil market order. It was at that point that then-Prince Mohammed bin Salman (MbS) pushed the idea of an initial public offering of Saudi Aramco, which could raise a lot of money and boost Saudi Arabia’s reputation in the global financial markets, which would help with further offerings. However, his assurances to senior Saudis that the IPO would raise at least UD$100 billion for a 5% stake fell flat as the offering was seen as toxic by many big investors in the West. It was then that China made the face-saving offer to MbS that it buy the entire 5% stake in a private placement. Although the deal was ultimately refused by the senior Saudis, MbS has reportedly never forgotten Beijing’s offer of assistance. For China the offer made perfect sense, as a deeper relationship with Saudi Arabia would give it preferential access to its big oil reserves and production. It would also give Beijing indirect influence over oil prices, as the Kingdom was still the de facto head of global oil cartel OPEC. Later, with the addition of major oil producer Russia to an expanded OPEC+ group, Beijing believed Riyadh could exert a moderating influence over any moves by Moscow to move oil prices in a sustained direction that China did not want. An additional benefit to Beijing was Saudi Arabia’s position as a leader in the Islamic world, which could be used by China to extend its influence further across the Middle East and beyond, including through the BRI. As the world’s oil supply is a zero-sum game, a further benefit for China was that its gain in any of these respects would be the loss of the U.S., its key superpower rival.
By 2022, the China-Saudi Arabia relationship had developed to such an extraordinary degree that Saudi Aramco’s chief executive officer, Amin Nasser said that: “Ensuring the continuing security of China’s energy needs remains our highest priority - not just for the next five years but for the next 50 and beyond.” In December’s first China-Arab States Summit and the first China-Gulf Cooperation Council Summit, plus tangential meetings with other Arab states around the same time, 34 agreements were signed between Chinese and Saudi companies covering a huge array of sectors, including, energy, technology, security, science and technology, aerospace, banking, and infrastructure, among many others. But it was President Xi Jinping himself who identified two ‘priority areas’ for the new relationship between China and the Arab states, including Saudi Arabia. These were the transition to using China’s renminbi (RMB) currency in oil and gas deals done between the and bringing Chinese nuclear technology to them, as also detailed in my latest book on the new global oil market order. This was all to be done within the context of “forging a deeper strategic cooperation in a region where U.S. dominance is showing signs of retreat,” according to China’s state media.
Implicit in China’s proposals was also the potential for Saudi Arabia to develop nuclear weapons, which Beijing believed would – when added to the same threat from Iran – necessitate heavy military involvement of the U.S. on the ground in the Middle East, a senior source in the European Union’s energy security complex exclusively told OilPrice.com at the time. Beijing was certain that such involvement would last years, bogging down U.S. forces in unwinnable wars which would allow China to consolidate its own military, economic, and political primacy in the Asia Pacific region. Indeed, just before Christmas 2021, news emerged that U.S. intelligence agencies had found that Saudi Arabia was manufacturing its own ballistic missiles with the help of China, while also continuing to provide extensive assistance to Iran’s own nuclear weapons ambitions. Little if any influence could consistently be brought on Saudi Arabia by the government of former U.S. President Joe Biden, given the personal animosity between him and many of the senior Saudis. Biden’s starting point was made clear in broad terms on 2 October 2020 when he said that any presidency of his would seek to: “Reassess our relationship with the Kingdom [of Saudi Arabia], end U.S. support for Saudi Arabia’s war in Yemen, and make sure America does not check its values at the door to sell arms or buy oil.” Specifically regarding MbS during the same speech – which marked the second anniversary of the murder of expatriate Saudi journalist Jamal Khashoggi that according even to the CIA was carried out on the personal orders of the Crown Prince – Biden appeared to endorse the CIA’s findings. He said: “Two years ago, Saudi operatives, reportedly acting at the direction of Saudi Crown Prince Mohammed bin Salman, murdered and dismembered Saudi dissident, journalist, and US resident Jamal Khashoggi…His offense – for which he paid with his life – was criticising the policies of his government.”
On the other hand, President Donald Trump’s ability to influence the Saudis appears to be much greater, based on three key reasons. First, he has flattered MbS, saying “I have so much respect [for him].” Second, he wields the most power of any person on the planet, and the Saudis respect power. And third, he is unpredictable. As it now stands, U.S. Energy Secretary Wright stated last week that he is optimistic about seeing a wide-ranging co-operation agreement – including nuclear energy – secured with Saudi Arabia in a matter of months.
By Simon Watkins for Oilprice.com
