An official said Saudi oil policy has been divorced from politics for years.
22 Oct, 2018FORTUNE.COM
Saudi Arabia has “no intention” of imposing a 1973-style oil embargo.
Khalid A Al-Falih, the Saudi Arabian Minister of Energy, Industry and Mineral Resources and Saudi Aramco Board Chairman told Russia’s TASS news agency that there was “no intention” to introduce another embargo. He added that Saudi Arabia had been using oil policy as an economic tool divorced from politics for decades.
That came as welcome news a week after Saudi officials threatened to hit back hard if it received any sanctions in the wake of the alleged murder of journalist Jamal Khashoggi. The head of the Saudi Arabian state-owned news network Al Arabiya, Turki Al Dakhil, wrote last week that oil production would be affected by any efforts to punish the state for Khashoggi’s death, and threatened oil prices of up to $200 a barrel if that happened.
In 1973, Saudi Arabia imposed an embargo on oil bound for the U.S., contributing to a quadrupling of oil prices and a gas shortage. Last week’s threat of another similar policy caused oil futures to rise by as much as 1.9%.
Although the threat of an oil shortage looms large, The Washington Post argues that Saudi policy wouldn’t have the same impact on the American market now--and that even in 1973, Nixon’s policies were more to blame for the oil crisis than the embargo.