Saudi still needs U.S. ally, China oil ties deepen
RIYADH/DUBAI (Reuters) - Violent uprisings across the Middle East and China's rise as the world's fastest growing oil market have shaken an oil-for-security bond between the United States and Saudi Arabia that has lasted for decades.
As western oil consumption stagnates, China is expected to take over the United States' role as the world's biggest oil user.
China is already Saudi Arabia's biggest customer and the kingdom is seen as keen to diversify its political and economic ties.
But while U.S. military might has long offered the capability to protect Saudi Arabia's vast energy resources, links between the leading oil exporter and China are chiefly commercial.
More than ever, as a revolutionary tide has swept away entrenched, autocratic leaders and rocked the oil-producing Middle East to its core, Saudi Arabia could need powerful back-up.
"The Chinese focus on economic interests and want regional stability, but are willing to do very little to ensure it," said Barak Barfi, a research fellow, currently based in Bahrain, with the New America Foundation.
"Abandoning the U.S. is not on the cards."
Others share his view.
"China is behaving as a mercantilist as it always does. China's interest in the Middle East is of a different quality. The issue is China is not seen as intervening in Middle Eastern affairs," said John Kuzmik, a partner and China specialist at Baker Botts international law firm.
Talks in the Saudi capital on Tuesday bringing together oil producers and consumers were attended by U.S. Deputy Energy Secretary Daniel Poneman.
China was also represented by senior officials rather than the minister himself and the delegation has so far kept a low profile.
Beyond the conference meeting rooms, however, China's growing business ties are reflected in the number of Chinese restaurants that have sprung up across the Saudi capital.
As the kingdom locks in future oil demand through refinery joint ventures in China, China has secured big contracts in Saudi Arabia. A Chinese firm has built a light rail system to ferry pilgrims from Mecca to holy sites.
Amicable, Sino-Saudi business ties contrast with mounting friction between Saudi and the United States.
In an unusual instance of open criticism, Saudi Arabia on Monday expressed regret, according to its official news agency, that the United States has supported Israel by using its veto against a draft U.N. Security Council resolution.
Analysts also say the Saudi perception is the United States abandoned Hosni Mubarak of Egypt, who was a crucial Arab ally for both Saudi Arabia and the United States to counter the regional influence of Shi'ite Iran.
"One has to deeply look at Saudi Arabia's systemic role in light of what just happened in Egypt," said John Sfakianakis, chief economist at Banque Saudi Fransi in Riyadh.
Even before this year's events, analysts said there were signs that U.S.-Saudi ties were frayed.
Trust was badly shaken by the September 11 attacks on the United States, in which 15 of the 19 suicide hijackers were Saudi.
At the same time, the often-stated U.S. desire to reduce its dependency on foreign oil has played badly to Saudi Arabia's domestic audience as the kingdom spends billions on maintaining spare oil capacity that it can add to the oil market to moderate prices for consumers in times of shortage or crisis.
Saudi's roughly 4 million barrels per day (bpd) of spare capacity could easily make up for the lost production of say Libya, whose leader Muammar Gaddafi faces a mounting revolt against his four decades in power.
The much greater fear for oil markets is the revolutionary ferment could spread to Saudi Arabia, where the minority Shi'ite population, based mainly in the oil-producing Eastern Province, has staged a small protest.
The province is near Bahrain, where protestors are trying to topple its Sunni leadership.
For now, Bahrain and its ruling al-Khalifa family is for both Saudi Arabia and the United States -- which bases its Fifth Fleet in Manama -- a remaining bulwark against Shi'ite Iran.
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