Johnson’s visit to Saudi Arabia is a fool’s errand

The Kingdom of Saudi Arabia knows how to handle its huge crude oil production capacity – as a founder member of OPEC it’s been at the game a long time. The House of Saud’s principal objective is to maximise revenues and in times of world shortages, for whatever reason, it knows how to do this.

These days the KSA plays the supply game as it always did but whereas in the past its potential income streams from oil revenues were well ahead of its national expenditure today there is a balance. And America’s oil self-sufficiency (achieved especially by exploiting Shale resources) means that one once crucial customer is out of the picture.

It’s perfectly possible that a pariah state seeking friends will make some cosmetic “concession” to Boris Johnson. It won’t mean much. The British Government does not buy or sell oil, it leaves that entirely to the private sector. Oil is a perfect market and oil traders have been operating in it for a long time. If Russia was to be removed as a player permanently (very unlikely) then other producers like the KSA would benefit as they have always done at times of demand/supply imbalance. Prices would rise.

The KSA knows well the game Johnson is playing but to them the U.K. is just another market, albeit one with long trading connections as a weapons supplier. Don’t be fooled though. There won’t be any deals which mean anything – that’s not how the oil business works.