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People use mobile phones during a blackout after Hurricane Rafael knocked out the country's electrical grid, in Havana, in November. On Tuesday, the island suffered yet another blackout when a major power plant failed.
Cuba suffers yet another blackout
For the third time in two months, all of Cuba was plunged into darkness as the island nation’s power infrastructure shuddered to a halt on Tuesday.
It’s the latest blow for the Caribbean country’s 11 million people, who are grinding through the worst economic crisis in decades. Rising energy prices and sluggish post-pandemic tourism have worsened the effects of economic mismanagement by the Communist government and longstanding US sanctions. In recent years, fully 10% of Cuba’s entire population fled the island altogether.
Especially painful: Cheap oil imports from friendly Venezuela have fallen. For years, Cuba has exported doctors and spies to Caracas in exchange for discounted crude. But Venezuela, struggling with US sanctions of its own, has begun prioritizing Asian buyers who can pay in hard currency. Imports from Russia and Mexico have also fallen, starving Cuba’s decrepit, oil-fired energy plants.
Politically, there has been little effect … so far. But it was only three years ago that Cuba saw its biggest anti-government protests – for food and freedom – in decades. A ferocious crackdown silenced dissent, and hundreds remain in prison, but the economic hardship has only deepened since then.
And don’t forget Los Yanquis. Donald Trump has tapped Cuban-American Sen. Marco Rubio, an ultra-hawk on Cuba, to be his top diplomat. Things are set to get darker still for the Cuban regime.
Saudi Arabian flag with stock graph and an oil pump jack miniature model are seen in this illustration.
Saudis face reality on oil prices
Since November 2022, Saudi Arabia has led the grouping of OPEC members plus Russia in maintaining oil supply cuts to try to keep prices as close as possible to an unofficial target of $100 per barrel for Brent crude. Not coincidentally, the IMF estimates Saudi Arabia need $100 barrels to balance its budget as Crown Prince Mohammed bin Salman funds hugely expensive development projects as part of his Vision 2030 economic reform plan. Saudi Arabia is currently producing 8.9 million barrels a day, its lowest level in more than a decade.
The lower price will be good news for incumbent politicians facing public anger over broader inflation. That’s also true for Democratic presidential nominee Kamala Harris, whom Donald Trump has blamed for higher prices for US consumers. The Saudi decision will keep gasoline prices in check through the US election.
US Secretary of State Antony Blinken.
Is the US trying to patch things up with Saudi?
US Secretary of State Antony Blinken traveled on Tuesday to Saudi Arabia for a three-day trip, marking the second high-level US visit to the kingdom over the past month.
While few have expectations of a large breakthrough in a relationship that's been underpinned by awkward exchanges and tense standoffs for some time, Blinken is likely hoping to bolster waning trust.
Why now? The US’ top diplomat likely hopes that confidence-boosting measures can help give Washington some renewed influence over global oil policy, which the Saudis largely steer. And the timing of this trip couldn’t be more apt, particularly after Riyadh announced Sunday that it will unilaterally slash oil production by 1 million barrels per day starting next month. (You may recall that the kingdom’s decision to cut oil output – in turn raising gas prices – ahead of the 2022 midterm elections deepened the US-Saudi rift.)
Blinken also reportedly aims to push the Saudis to normalize ties with Israel, which has long been on the cards but hasn’t materialized due to a range of sticking points.
To be sure, the US-Saudi relationship is important to both sides. However, deteriorating relations amid a changing geopolitical landscape reinforce that the longstanding model of Saudi oil in exchange for US arms and security guarantees no longer flies.
Saudi Arabia's Minister of Energy Prince Abdulaziz bin Salman Al-Saud arrives for an OPEC meeting in Vienna.
Global oil prices and a “Saudi lollipop”
In a dramatic decision, Saudi Arabia announced Sunday that it will take a unilateral step to slash its oil output by 1 million barrels per day in order to boost global oil prices.
Other OPEC+ states – which include resource-rich countries in the Middle East, Latin America, and Africa, plus Russia – committed to extending earlier cuts announced in April through the end of 2024, though they didn’t go even deeper like the Saudis.
Oil prices have hovered between $70-76 in recent months, well below the $80.90 per barrel the International Monetary Fund estimates that Riyadh needs to meet its ambitious economic goals and diversify its economy away from dirty fossil fuels. Still, oil prices have remained sluggish despite efforts by the Saudis in particular to tighten supplies over the past year.
Saudi Energy Minister Prince Abdulaziz bin Salman, who reportedly made the call, said the cut would be for the month of July but could be extended, describing the measure as a “Saudi lollipop” for the oil-producing cartel. (The subtext: What’s good for us is good for you!)
The US and EU, for their part, have accused the Saudis of manipulating oil prices and causing global economic havoc since Russia’s invasion of Ukraine in Feb. 2022. Surely, this will only further infuriate the Biden administration, which wants to keep gas prices down from record highs seen last year as the 2024 presidential race gets underway.
The Saudis are sending a clear message that they are willing to set a floor price for their most valuable export. And while they won’t care much about angering the Americans, they will care about the Chinese response, considering that Beijing is the kingdom’s largest market.
Models of oil barrels and a pump jack are seen in front of displayed EU and Russia flags colors.
What We’re Watching: Russian oil price cap woes, Iran’s morality police 'U-turn'
Capping the price of Russian oil is harder than the West thought
A long-awaited G-7 $60 per barrel price cap on Russian oil took effect Monday. Markets responded with skepticism: In early trading, the price for Brent crude, the global benchmark, went up slightly to $86 per barrel. Why? Three days after the sanctions scheme was announced, its weaknesses have started to show. First, Russia has outright refused to accept the cap and is mulling a response — perhaps refusing to sell any crude to countries that enforce the price ceiling. Second, Ukraine thinks the cap is too weak to seriously damage Russia's economy. Third, OPEC+, which includes Russia, says it's business as usual and that it's not changing its output levels. There are fundamental flaws to the measure. After all, it’s not really a price cap so much as a limitation on insurance and shipping firms, and it lets Russia continue to sell oil, just at a lower price. Also, most of Ukraine’s friends wanted it to be lower than $60, and big Asian buyers haven’t signed on. Meanwhile, two of Russia’s biggest customers, China and India, will continue to stock up on cheap Russian crude. So far, the price cap, imagined by Washington and executed by the G-7, seems somewhere between a bureaucratic irritant and a slap on the wrist for Moscow.
Is Iran really scrapping its morality police?
Appearing to respond to mass protests, an Iranian prosecutor — notably not a regime spokesman — said on Saturday that Iran is dismantling the country's notorious morality police. Demonstrations have rocked the country ever since a young woman detained by morality police for improperly wearing a headscarf died in custody in September. Does the announcement mean the police unit will really be abolished, or that the protesters can go home? Not so fast. Hardliners will certainly fight to retain the morality police, and while the strict dress codes will supposedly be reviewed, they are still very much on the books. It's unlikely that a theocracy like Iran is going to let women dress as they please. Still, commenting on dismantling the much-hated unit is a clear sign the regime knows it can't just dismiss the biggest uprising since the 1979 Islamic Revolution. What’s more, the chatter has emboldened the demonstrators to apply even more pressure — beginning with a fresh three-day strike on Monday. Will the mullahs respond by making more concessions or by cracking down further? Momentum against the regime is certainly building — so much so that Iranians celebrated their soccer team's World Cup loss to the US last week. For more on the soccer backlash, check out Ian Bremmer's interview with Iranian activist and journalist Masih Alinejad here.
*Correction: This Watching has been updated since our morning Signal newsletter.
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People walk as they protest in Moundou, Chad.
What We’re Watching: Chaos in Chad, Biden’s barrels of oil
Trouble in Chad
Around 50 people were killed Thursday in Chad amid clashes between security forces and protesters over the junta's decision to delay returning to civilian rule by two years. Hundreds more were injured. The anger is directed at Mahamat Idriss Déby, who took over the Central African nation in April 2021 after his strongman dad and namesake was assassinated by a rebel group. Upon assuming power, the four-star general quickly dissolved parliament to rule by decree but promised to hold a new election in 18 months (Chadians were not happy about it). Earlier this month, military leaders pushed that deadline back to October 2024. Déby, 38, was sworn in last week as "transitional” president and says he plans to run for the job. Will Chadians let him? It's unclear if the younger Déby has as firm a grip as his father, who led the country with an iron fist for 30 years and was considered a reliable Western ally against Islamic extremism. One external player in a tricky spot is former colonial power France: Paris is wary of rising anti-French sentiment there and wants to keep a low profile, but it also needs stability because French energy major Total does a lot of business in oil-rich Chad.
Biden plays with energy
The White House announced this week that it will release another 15 million barrels of oil from its strategic reserves in a bid to reduce prices at the pump. President Joe Biden also called on oil companies to use their “record-breaking profits” to pump and refine more oil. Though average fuel prices in the US are down from a June high of $5 a gallon, they’re still 12% higher than this time last year. The strategic release – expected to begin in December – is part of what Biden has called a “wartime bridge” meant to help consumers deal with rising energy prices as a result of Western bans on imports of Russian gas and oil. It’s the last part of his plan, announced in the spring, to release 180 million barrels of oil from strategic petroleum reserves, which has pushed the US’ rainy-day stockpile to its lowest level since 1984. Biden hoped this might lower gas prices ahead of midterm elections on Nov. 8, which are not looking good for Dems. But the later-than-hoped-for timing of the release is a reflection of how fast the strategic petroleum reserve can physically be drawn down. This comes after OPEC+ recently announced it will slash oil output by 2 million barrels per day, which will likely contribute to global gas price hikes right as Americans head to the polls.Saudi Arabia’s Crown Prince Mohammed bin Salman and US President Joe Biden during a summit in Jeddah.
Laws, votes & guns: America’s options to respond to Saudi oil cuts
Following the largest cut in oil production — 2 million barrels per day — since the beginning of the pandemic by the Saudi-led OPEC+ oil cartel (which includes Russia), the Biden administration finds itself on a war footing about how to deal with Riyadh.
Not heeding American pleas to increase output — and instead triggering an increase in oil prices just before the midterm elections — is being seen in Washington as an attempt by Saudi Crown Prince Mohammed bin Salman to influence US politics to the advantage of Republicans. It’s also being kicked up as a clear pro-Putin move by some members of Congress, who have started to push legislation that would enable the White House to deal forcefully with the Saudis.
Remember, President Joe Biden burnt a lot of political capital in the summer with his tour of Saudi Arabia — fist-bumping-for-oil-pumping was the intention, kind of. Clearly, by the president’s own admission, those measures have fallen short.
With gas prices spiking, Republicans blaming the White House and Democrats pushing for action, how will the administration respond? Besides a host of maneuvers (limiting energy exports, tapping into the already almost-tapped out Strategic Petroleum Reserve, easing sanctions on oil-producing bad actors), the Biden administration has at least three choices provided by Congress to move against the Saudis and/or OPEC+.
First, the NOPEC vs OPEC option: The NOPEC (No Oil Producing and Exporting Cartels Bill) bill would empower the US Justice Department to sue oil cartels for antitrust violations in oil and gas products. The premise would be prosecuting price-fixing under the Sherman Act, and consequences could include seizing foreign-owned property to pay for damages.
Until recently, the White House had been careful not to take up this option, but has now hinted that it’s now working on it with Congress — where the legislation has enjoyed bipartisan support for years.
Next, the OPEC Accountability Act [aka the ‘See You In Court’ Act]: Reintroduced last week on the same day as the OPEC+ announcement, this bill would require the US president to initiate consultations with OPEC countries; if these do not succeed in “ending collusion on oil production and market manipulation,” the legislation instructs the US Trade Representative to initiate dispute proceedings at the World Trade Organization, which would take the US versus OPEC+ war into the bureaucratic but hectic machine of international law.
Then, the [aptly named] Strained Partnership Act: Also tabled last week by Democrats who term Saudi actions as a hostile move that hurts American consumers, the bill focuses on the US pulling out its approximately 3,000 troops in Saudi Arabia and 2,000 in the UAE, including Patriot missile batteries and the THAAD air defense system based there, within 90 days.
Unclear about where in the Middle East to relocate these assets, the proposed legislation isn't novel either: its Democrat authors say Republicans used similar legislation under former President Donald Trump to stare the Saudis down in 2020 — but that was to decrease production, not increase it. In any case, the bill acknowledges the difficulty of moving troops around “to the extent practicable.” Also, Congress is out of session until the election.
However, Washington’s defense ties with Riyadh have become very unpopular with Americans. A new Eurasia Group Foundation survey says that more than two-thirds of both Democratic and Republican and Democratic voters oppose continued US arms sales to Saudi Arabia.
While the US is the world’s largest arms exporter, Saudi Arabia is the world’s second-largest importer. The kingdom is also the No. 1 importer of American weapons, accounting for 23% of all US exports from 2017-2021. But America’s biggest arms customer is also its most controversial buyer.
The tilt within Biden's own party is clearly against selling weapons to the Saudis: nearly three-quarters of Democrats opposed arms sales to Riyadh, compared to 62% of Republicans, according to the survey.
Why? First, Saudi Arabia’s track record of domestic oppression and human rights abuses. Second, the kingdom’s use of US-provided weapons in the war in Yemen.
Collusion on oil prices wasn’t one of the top reasons — but it could be now. The study also notes that while Biden announced early in his administration an intent to end the sale of offensive weapons used in Saudi Arabia’s war in Yemen, he’s reportedly still reevaluating this decision.
In the desert, reality bites the dust. The US has a host of measures it can take to retaliate if it wants to, including limiting arms. But none of these are likely to alter Saudi decision-making or deter Riyadh from taking similar decisions on oil in the future, even if this means being at odds with Washington, says Raad Alkadiri, Eurasia Group’s managing director for Energy, Climate & Resources.
“This is the latest sign of a strategic schism in the alliance that has been building for some years,” he explains. “Saudi and US interests are diverging, with Riyadh increasingly questioning the credibility of the US security guarantee and putting its own financial and economic priorities ahead of Washington’s desire for lower oil prices.”
While the Saudi oil-price floor no longer overlaps with the US oil-price ceiling, at least for the moment, and with both sides focused on immediate political and economic priorities, Alkadiri says that the room for compromise has shrunk.
Clearly, Saudi Arabia under MBS is acting more independently than it has done in the past, and much like the UAE, is looking east to secure its economic future.
“The erosion of the alliance with Washington is the result, and it is giving full voice to anti-Saudi sentiment that has long percolated just under the surface in Congress, and in this White House as well,” says Alkadiri.
Is this going to be the pattern for the future? For Alkadiri, “we are witnessing a particularly fraught moment in US-Saudi ties, largely because Riyadh’s oil move risks damaging the Biden administration’s — and the Democratic Party’s — political interests at home. It has led to a lot of mud-slinging at the Saudi leadership.”
“Anger in Washington,” he adds, “will probably die down a bit over time, but the strategic differences that will shape the relationship moving forward have been exposed in the full light of day.”
What about the Saudi take? American officials, the Saudis say, "tried to position it as 'us versus Russia,'" pushing them into a corner where they needed to make a call. That didn’t work, and the Saudis pushed back with their own advice for the US: pump more of your own oil, and fix your refineries.
Riyadh also raised reservations about the lack of details from the US about the price cap plans on Russian oil. In the end, it came down to priorities, with the Saudis dropping diplomatic niceties.
"We are concerned first and foremost with the interests of the Kingdom of Saudi Arabia and then the interests of the countries that trusted us and are members of OPEC and the OPEC+ alliance," the Saudi energy minister said on the day of the announcement.
Bottom of the oil barrel: The tense dynamics of the Washington-Riyadh dyad, compounded by the ascent of MBS – who is now PM, a privilege that his lawyers argue provides him immunity from being tried in the US for the murder of journalist Jamal Khashoggi – suggest bilateral ties will be determined much more by “immediate imperative rather than strategic coordination,” says Alkadiri. We have moved beyond the US-Saudi relationship of old into a repositioning that could be “more competitive and confrontational.”This article comes to you from the Signal newsletter team of GZERO Media. Sign up today.
Russian President Vladimir Putin and Iranian President Ebrahim Raisi meet on the sidelines of the Caspian Summit in Ashgabat, Turkmenistan.
Putin in Iran: Alliances, arms, and energy on agenda
Iran and Russia are considered staunch enemies of the West, paying for it with crippling sanctions and diplomatic isolation — in Tehran's case over its nuclear program and in Moscow's over its invasion of Ukraine. The two countries, consequently, have turned to one another and boosted their economic and military cooperation.
But even as the US attempts to back a new, anti-Iran order in the Middle East, Russia is making its own moves there.
On Tuesday, Russian President Vladimir Putin will meet his Iranian counterpart, Ebrahim Raisi, in Tehran. They will be joined by Turkey’s President Recep Tayyip Erdogan, a prickly member of NATO but also the main interlocutor of the ongoing peace negotiations between Moscow and Kyiv, as well as a key player in Syria, where the three countries have converging and conflicting interests.
What's on the agenda? Energy, arms, alliances, and Syria. But above all, the need to unite on a worldview different to the one US President Joe Biden pushed for during his recent regional tour.
Seeking a slick solution. “The proximate reasons for this meeting are pretty obvious. Russia has entered a discount war with Iran for oil markets, and Tehran wants that stopped …,” says Cliff Kupchan, chairman of Eurasia Group.
When it comes to energy talk, some fence-mending is expected. Russian oil producers, stonewalled out of Western markets by sanctions, have been selling cheap oil to China, India, and other Asian buyers, moving aggressively on a coveted client list of “will-work-with-sanctioned-sellers” Iran has carefully cultivated for years while under similar sanctions.
The Iranians are not happy about having to push the price of their oil down further because the Russians are selling at a bargain. After all, oil exports make up half of the Islamic Republic’s export income.
Putin will try to do some hand-holding, even as he seeks expertise from the Islamic Republic about how to work through sanctions, which Tehran has survived for almost two generations.
Weapons, please. Ahead of Putin's trip, Washington claimed Iran wanted to sell Russia weapons-capable drones for use in Ukraine. The Iranians denied the charge; the Russians didn’t comment. But earlier this summer, Russian officials did visit Iran to check out Tehran’s advanced drone program.
In the end, “Russian weapons will go to the Iranians, and Iranian drones to Russia," says Bruce Riedel, a senior fellow at the Brookings Institution.
Keeping Iran close. Russia’s leader has spent time and resources to court the Iranians. Putin’s already met Raisi twice this year, and he recently declared in Turkmenistan that Moscow-Tehran ties are of a “truly deep, strategic character.” Bilateral trade, up 80% to $4 billion in 2021 compared to the year before, is now being targeted to expand ten-fold.
Playing along with Moscow and Beijing in bloc politics, Iran is reciprocating by moving to join the Russia and China-led Shanghai Cooperation Organization, which would make Tehran “one of the key centers of the emerging multipolar world order,” according to Russian Foreign Minister Sergey Lavrov.
Moreover, in exchange for Iran's playbook on how to get through sanctions, Putin is even considering preferential grain deliveries to inflation-hit Iran. “Russia will now be a major hole in sanctions on Iran,” says Riedel.
But there are cracks, too. Russia and Iran have competing interests in the Middle East. Putin has relationships with US allies that Iran either considers outright enemies, like Israel and Saudi Arabia, or is uncomfortable with, such as the UAE and Egypt.
Then there's the aforementioned undercutting of Iran by Russia on energy exports, which the isolated regime in Tehran relies heavily on. What's more, Russia threw a sanctions curveball earlier this year that dashed hopes for a swift revival of the Iranian nuclear deal, shocking Tehran. While Russia taking a massive bite out of Iran’s share of oil consumers angered Tehran, that’s where Putin comes in with diplomacy, shrewdly managing to win over the Iranians strategically while bleeding them commercially.
Putin stealing Tehran’s lunch with recent energy sales isn’t cultivating support on the streets of Iran for Russia either. But ultimately, the basic instinct of both states is revisionism – pushing against the status quo. That’s what binds them. And that’s where the peril and potential of the Russia-Iran axis lie.
“We are all now immersed in the war in Ukraine. But Putin's playbook has much more depth than the war. It's been about — and will again be about — lashing out and playing spoiler against the US-led order,” Kupchan says.
This week, expect Putin to try and solidify ties with a key ally in that broader venture, which Kupchan says the West should watch closely. China may pose many challenges, but it has more vested interests in the status quo, unlike Russia and Iran, which together can become “real trouble.”
What about Turkey? Don’t expect Ankara to be a mere third wheel. While the Turks ticked off Putin by agreeing (in return for security assurances) to not block NATO enlargement to Finland and Sweden, Erdogan has successfully emerged as mediator-in-chief between Russia and Ukraine.
Just last week, he managed to get an in-principle agreement from Russia to lift the blockade of Ukraine’s Black Sea ports and free up some 20 million metric tons of food to feed the region and beyond.
Putin and Erdogan will talk shop about how to get Ukrainian grain through the Black Sea. They will also discuss Turkey’s drone sales to Ukraine, which Putin likely resents because they’ve been highly effective on the battlefield.
Lastly, they’ll tackle the issue of Syria, where finding a consensus among the three countries won’t be easy.
Moscow and Tehran support President Bashar al-Assad, while Turkey backs the rebel groups who are fighting him. Moreover, the Turks also want take out the Kurdish militias based in northern Syria — but Ankara will need Russian and Iranian sign-offs because the two countries remain influential in the war-torn country.
Upshot. Biden says America will push back on efforts by China, Russia, and Iran to fill the vacuum created by US disengagement from the Middle East. But it’s not going to be that simple.
The Iran nuclear deal is still not back on track. If Iranian drones end up getting deployed in Ukraine, and Russian weapons end up in Tehran’s hands, it'll take more than a Saudi fist bump for America to counter its rivals in the world’s most volatile region.
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