How long can Saudi Arabia and Russia survive in a world of $20 oil?
With coronavirus lockdowns causing a drastic reduction in demand for oil, many of these countries won’t be able to pay their bills, bribe their military officers, or provide basic social services to their populations.
Bruce Riedel, a former CIA analyst, now a senior fellow at the Brookings Institution’s Center for Middle East Policy, told me this week that the Saudis in particular “are facing the perfect storm—weak oil, prices, pandemic, and quagmire in Yemen.” The combination, he said, “will impact stability” inside Saudi Arabia and possibly in throughout the region.
Philip Gordon, a former Middle East official in the National Security Council, now a senior fellow at the Council on Foreign Relations, cautions against overstatement. “Obviously, this is a big deal,” he told me, “but basic geopolitical relationships don’t easily change.” For instance, sanctions against Iran have cut its oil revenues by tens of billions of dollars, but its policies and position in the Middle East haven’t changed much.
Saudi Arabia and Russia, the two biggest oil-dependent states, are also cushioned by sovereign wealth funds—
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