Perhaps many of you simply assume this at this point. But it’s worth saying out loud before we get too much further into the election season. The government of Saudi Arabia is ecstatic about the possible return to power of Donald Trump. And there’s every reason to believe they will use their disproportionate power over oil prices to smooth his return to the White House. Indeed, it’s not just Saudi Arabia. It’s Russia too. The two countries are in a production alliance Bloomberg aptly calls a “crude, inflationary alliance.”
Both countries have interests beyond the next US presidential election. But really, it’s hard to think of many things that bulk quite so large for each government’s future, isn’t it? In this article John Authers notes that over the last decade the big moves in oil prices have been driven not by supply and demand but by geopolitics.
The Saudi Kingdom’s de facto rule Mohammad bin Salman’s coziness with the Trump family is notorious. Meanwhile, if Trump defeats Biden next year that would allow Vladimir Putin to escape the most monumental mistake of his two plus decades in power. We don’t even have to assume a new Trump administration would immediately switch sides or cut off support to Ukraine. Opposition from Congress would probably (maybe?) prevent anything quite so sudden and drastic. But both Ukraine and Russia would know that the clock was ticking on US support for Ukraine. That would greatly increase the odds of some stalemated, frozen conflict like the ones we see around the former Soviet periphery and indeed saw in Ukraine itself from 2014 to 2022.
Of course, the Saudis put their finger on the scale in 2022 as well. It failed to produce quite the effect they likely wanted. But we can’t ignore the fact that both these governments have huge interests in Joe Biden being defeated next year. Together they can have an immense impact on the price of oil which drives both politically sensitive gas prices as well as complicates the fight against inflation.