World Leaders Fight Over Turbulent Oil Market at G20 Summit

As world leaders gather for the G20 summit, oil is at the top of the list of issues. Scholar Vijay Prashad discusses the fight between the US, Russia, China, and Saudi Arabia over price and production, and notes India is in talks with Crown Prince MBS

World Leaders Fight Over Turbulent Oil Market at G20 Summit

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Story Transcript

BEN NORTON: It’s The Real News Network, and I’m Ben Norton.

World leaders representing the largest economies are meeting in Argentina this weekend for the annual G20 summit. This year’s summit is marked by a few major issues and controversies, including the fight over oil prices, the aftermath of Saudi Arabia’s brutal killing of royalist Jamal Khashoggi, the trade war between the United States and China, and new relations over oil between India, China, Saudi Arabia, and other countries. CNN noted this year that oil is one of the key topics at the summit. CNN pointed out that the price of U.S. crude has dropped around 20 percent just in this month of November, and some countries are complaining about oversupply.

At the G20 this year, the leaders of Russia and Saudi Arabia, two of the largest oil producers, will be meeting to discuss oil. Russian President Vladimir Putin and Saudi Crown Prince Mohammed bin Salman want to decrease the supply of oil in order to increase its price. President Donald Trump, on the other hand, wants the price of oil not just to stay down, but to drop even further. On November 21, Trump tweeted: “Oil prices getting lower. Great. Like a big tax cut for America and the world. Enjoy. Fifty-four dollars. Was just eighty-two dollars. Thank you to Saudi Arabia, but let’s go lower.” That was Donald Trump tweeting.

Russia has actually reduced its oil output before the meeting that it’s going to have at the G20 with Crown Prince Mohammed bin Salman. But what’s also interesting, and an angle that’s not getting nearly enough attention in the U.S. media, is that the crown prince of Saudi Arabia also met with India’s Prime Minister Narendra Modi to discuss oil, and India is trying to diversify its oil imports. And then, of course, all of this comes after increased scrutiny of the Saudi kingdom, and specifically the crown prince, in light of the assassination of Khashoggi in Turkey on October 2.

So joining us to unpack all of this is scholar Vijay Prashad. Vijay is an Indian historian and journalist. He is the author of two dozen books, and is the director of the international think tank the Tricontinental. Thanks for joining us, Vijay.

VIJAY PRASHAD: Thanks a lot.

BEN NORTON: So there’s a lot to talk about here, and I want to talk about these different angles. I mean, there’s the trade war between the U.S. and China. There is, of course, oil. But let’s begin–an important point that’s not getting a lot of attention in the U.S. media is this meeting between the Indian Prime Minister Modi and Mohammad bin Salman, the Saudi crown prince. And specifically, their discussions of oil. So can you talk about the importance of this, and why you think this issue should be getting more attention?

VIJAY PRASHAD: You know, Ben, the interesting thing is that there’s a lot of discussion about the role of the Crown Prince of Saudi Arabia Mohammed bin Salman, his role in the war in Yemen, his role recently in the killing of Jamal Khashoggi. You know, this is where I think a lot of the press, particularly in the West, has focused. I think less attention has been paid to develop weapons around the oil markets and the role of Mohammed bin Salman in Asia. You know, ever since the United States reinstated sanctions against Iran, this is what a lot of pressure on Asian countries; China, India, Japan, even countries like Sri Lanka, Malaysia, and so on, having a hard time with their oil imports because they’ve come to rely on Iranian oil.

The reason they don’t buy Saudi oil–they buy Saudi oil, but not at the same levels as they’re going to–is because Saudi Arabia has had erratic oil prices. There’s been problems with Saudi light crude. They prefer to buy the medium and hard crude, which is closer to the Iranian oil. There have been several problems. And during the course of this year, Mohammed bin Salman’s even said Saudi Arabia tried to settle some of these issues. So for instance, in terms of pricing, the benchmark price in Saudi Arabia has now been diversified. You know, the Dubai and Oman benchmarks have been combined. This is actually quite advanced in terms of predicting prices. Saudi Arabia has also faced something that’s been going on since 2005, which is India and China considering building a oil buyers club. OPEC is the organization of oil producers. But India and China have been thinking of setting up an oil buyers’ club which is going to set a buying price. So Saudi Arabia has had to deal with that, as well.

I just want to put this on the table for us to understand that when Narendra Modi and Crown Prince Mohammed bin Salman met in Buenos Aires just before the Group of 20 countries met with their meeting, on the table was oil. Not the killing of Jamal Khashoggi, not the war in Yemen. And it’s oil that’s on the top of the agenda because this week in Vienna, both OPEC and non-OPEC countries had a very important meeting where they discussed again the question of oil prices. And the OPEC bloc is largely led by Saudi Arabia, the non-OPEC bloc is led by Russia.

And so here you have a perfect storm this week of conversations about oil; some of it sparked by the U.S. sanctions against Iran, which has really taken off [protections] in Asia from being able to buy from Iran. And it’s increased pressure on these countries to start buying from Saudi Arabia. So in a sense, the economics has overcome the kind of moral political debate that was supposed to be held around the question of the legitimacy of Mohammed bin Salman’s rule, and his role in the war in Yemen and the killing of Khashoggi.

BEN NORTON: There’s lots to respond to there, and I do want to talk about Khashoggi. Before that, let’s talk a bit more about India and oil. We saw that the U.S. for the past year has been pressuring India to cut its oil imports of Iranian oil. India and Iran have a very close trading relationship when it comes to oil. In fact, India is the second-largest purchaser of Iranian oil. And Narendra Modi was considering cutting Iranian oil to appease the U.S. He actually ended up backing off, and is continuing imports of Iranian oil. But he’s looking to diversify India’s oil imports, and I think that’s part of the reason behind the meeting with Saudi Arabia. So can you talk more about India’s role in this, and the pressure on India to cut its oil relations with India–with Iran, rather? Especially in light of the fact that since the election of Narendra Modi–this is a far-right nationalist who was elected in 2014 of the BJP party–India’s relations with the U.S. and also with Israel have greatly increased. And one would think that that would actually pressure India to weaken its relations with Iran.

VIJAY PRASHAD: Well, it’s difficult for India to pivot 180 degrees away from Iran for several reasons. I think the most important reason is the one we’ve already started to talk about, which is the question of oil imports. India is entirely reliant on the import of oil. And Iran plays a very important role here in terms of providing oil on a reasonable basis. The prices are good, the oil is excellent, and Iran is nearby, so that transport costs are not very high. And India, even though it received immense pressure from George W. Bush’s administration–you know, now in the 2000s, 2003, ’04, and ’05–immense pressure. In fact, George W. Bush’s administration said that it would take India out of the kind of diplomatic isolation after India had done its second set of nuclear tests, and said it would provide India with guarantees in the nuclear suppliers group so that India could get uranium and other materials for its nuclear reactors. What the United States was saying was increase your use of energy from nuclear and cut your ties with Iran. That was the promise in the Bush administration.

Of course, you know, energy from nuclear, even in the most optimistic scenario for India, is minuscule. And the reliance on Iran continues. So right during the most difficult period of sanctions, India was importing oil from Iran. When Mr. Trump tried to cajole India and other countries to back him with this new sanctions regime, it was not only India, but even Japan, a very close American ally, that said that no, they would not like to go along with the American sanctions on Iran because these countries rely on Iranian oil.

So this is a very important part of India’s frame. The other side is that, you know, despite the fact that this right-wing government would like to have much closer ties with Israel, the United States, and so on, there remains a very strong sensibility inside India’s diplomatic community, inside its political community, towards the non-aligned movement. And I don’t think this should be set aside and mocked. I think this is a serious debate inside India, and Mr. Modi has found it hard to pivot fully away from the non-aligned perspective. Linked to this, as far as Mr. Modi Is concerned, is he’s up for re-election next year. The Indian economy is in very poor state. Inflation is high, ordinary goods cost has gone up because oil prices inside India remain high, despite the fact that internationally they are down. So Mr. Modi is under pressure to balance the economic question. So I think ideology here is getting slapped around by the practical nature of where India is today.

BEN NORTON: Now, let’s pivot a bit and talk about Russia, Saudi, and OPEC. We saw the recent announcement that there going to be a meeting between Putin and MBS. We actually saw that during the Olympics there was another meeting. And specifically during the OPEC–or what was called the OPEC -plus negotiations–there were similar discussions and negotiations between Saudi and Russia. And in fact, against the will of the U.S. Saudi Arabia is, of course, in many ways a kind of client state of the U.S. But under MBS we actually have seen the country in a few different ways, including arms sales and oil production, we’ve seen it kind of deviate from the U.S. line, and in some ways collaborate with Russia.

And I’m wondering, we were talking about the Khashoggi killing. And as horrible as it is, of course, Saudi Arabia is committing many worse crimes on a daily basis in Yemen. At least 85,000 children have died from starvation and disease, and that’s likely a very conservative estimate, along with tens of thousands more killed in the actual violence. That, interestingly, has not gotten much attention in the U.S. media. It’s getting more attention because U.S. politicians and lawmakers are trying to push back against U.S. support for the war. But of course it exposes this double standard. And it makes one question why the Khashoggi killing is so highlighted. And specifically, you know, we can’t get into the role of Turkey and other countries in all of this and this kind of Middle East realignment. But really what I’m getting at is do you think that one of the reasons that this Khashoggi killing is being so highlighted, one of the reasons the CIA has come out pretty openly against Mohammed bin Salman, is precisely not because of the Khashoggi killing–that’s certainly part of it–but rather because of his willingness to diversify Saudi’s oil deals with other countries? His move not necessarily away from the U.S., but toward a kind of more