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Does Saudi Arabia Still Matter? Differing Perspectives on the Kingdom and Its Oil

Fiona Hill and Shibley Telhami

The U.S.-Saudi relationship has come under considerable scrutiny recently, with some analysts questioning its centrality in U.S. foreign policy. The discovery that many of the September 11 attackers were Saudis is partly responsible, as inquiries into the society and political system that produced these terrorists have yielded grim results. In these pages, for example, Eric Rouleau has noted that “a major crisis is now brewing in Saudi Arabia” and warned that public anger there at both the monarchy and the United States “poses intense risks for both countries; indeed, if not controlled it could tear apart [their] strategic alliance” (“Trouble in the Kingdom,” July/August 2002). Changing conditions in the oil market and the ascendance of new suppliers such as Russia, meanwhile, are raising a different set of questions. Thus Edward L. Morse and James Richard have challenged the assumption that Persian Gulf oil remains vitally important to the United States (“The Battle for Energy Dominance,” March/April 2002).

Certainly, events in the past year have shown the need for profound political and economic reform in Saudi Arabia, which would bolster the stability of the kingdom as well as the global economy. Yet the proposition that the Persian Gulf states and Saudi Arabia are losing their significance for the United States misses the mark on several issues.

WHERE’S THE OIL?

The Persian Gulf region remains central to the global oil market and will become even more vital in the future. U.S. oil imports from outside the Middle East will not change this fact. The United States and the other major oil importers—western Europe and increasingly, as Morse and Richard note, South and East Asia—are all part of a single, seamless oil market driven by supply and demand, and global demand for oil has risen steadily over the last several decades. Oil currently accounts for 40 percent of global energy consumption and is not anticipated to fall much below this share in the next 20 years.

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