Can Johnson strike a deal in the desert?

Boris Johnson met with Saudi Crown Prince Mohammed bin Salman in Riyadh today in a bid to boost global oil supplies and tame turbulent energy markets.

The PM also held talks with the UAE’s Crown Prince Mohammed bin Zayed during his trip to the Gulf – a diplomatic shuttle run to help manage the fallout from Western sanctions on Russian oil and gas. The International Energy Agency warned today that three million barrels of Russian oil a day – around 3% of global supply – could be wiped off the global market by next month, raising the prospect of “the biggest supply crisis in decades”.

Downing Street has been keen to stress that the mission is not – repeat, not – a rejection of Britain’s COP26 commitments. Part of Johnson’s mission, it said, is to secure big investments in green energy.

The PM also promised to raise human rights issues and insisted the UK can “stick to our principles”. But the tension between realpolitik and ethics is stark. Saudi Arabia put 81 people to death on Saturday, the biggest mass execution in modern Saudi history. It’s hard to imagine that this execution, or the circumstances surrounding the murdered journalist Jamal Khashoggi, were high on the agenda. Or indeed Yemen.

Put simply, Saudi Arabia is the world’s second largest oil producer and could ramp up production by two million barrels a day if it wanted to. Western sanctions and the pivot away from Russian oil and gas has already led to near-vertical price rises. For markets to stabilise, the supply gap needs to be plugged.

Getting Gulf states to pump more oil would only be a quick fix but it would go some way to softening the short-term economic blow. As Sir Keir Starmer put it: “Going cap in hand from dictator to dictator is not an energy strategy.” Johnson’s new energy approach – promised last week – is now due next week.

Hopes for a “deal in the desert” aren’t high. While the UAE is thought to favour increasing production, the consensus of OPEC+, where the Saudis hold a lot of sway, is that there’s no immediate need. And if the states do agree to pump more oil, they would expect something in return. It’s not clear what Johnson might have to offer. 

Even though Johnson is on good personal terms with MBS (they are said to message on WhatsApp), relations between the Gulf states and the West are cooler than they have been for a long time. Riyadh is frustrated that Washington is not taking its security concerns seriously, most notably on Iran, the nascent nuclear power and Saudi nemesis. 

It’s the Saudis who hold most of the cards. But MBS still faces a difficult decision. The release today of Nazanin Zaghari-Ratcliffe after six years in prison in Iran (see Hound, below) suggests US-led efforts to revive the 2015 Iran nuclear deal are close to being agreed in Vienna. It would mean sanctions on Iran being lifted, and Iranian oil flowing once again. If Riyadh chooses to play hardball with the West over oil production, it could make a deal that’s softer on Iran more likely. This is the calculation MBS will have to make.