An ongoing diplomatic row between Saudi Arabia and Canada will not affect crude oil exports from the Kingdom, Energy Minister Khalid al-Falih said, adding that Riyadh’s policy has always been to keep politics and energy exports separate, Reuters reports.
Saudi Arabia earlier this week cut off diplomatic relations with Ottawa following criticism by Canada’s Foreign Minister about Saudi Arabia’s detention of several women’s rights activists. The Foreign Ministry has reiterated its stance on human rights, releasing a statement to that effect in response to Riyadh’s announcement of the diplomatic cut-off.
As the row deepens, oil was bound to become the center of attention, albeit briefly. Canada imports around 75,000-80,000 bpd of Saudi oil, and these barrels can easily be replaced, CBC quoted analyst Judith Dwarkin as saying earlier this week. The chief economist of RS Energy Group referred to this amount as “a drop in the bucket” at less than a tenth of Canadian crude imports compared with imports from the United States, which amount to about 66 percent of the total. The United States could easily replace Saudi crude thanks to its growing production, Dwarkin said.
What’s more, total bilateral trade is only a small fraction of Canada’s total trade, so if anyone is seriously affected by Riyadh’s strong reaction to Ottawa’s criticism of its human rights record, it will be the Kingdom. Analysts are already warning that the row would further dampen investor interest in Saudi Arabia, which is on a quest for diversifying its economy dubbed Vision 2030.
If the Kingdom reacts so strongly to a piece of criticism, the argument goes, how safe are investments there? The impression Riyadh is creating with its response to the Canadian criticism—the Saudi Foreign Minister called on Ottawa to “fix its big mistake”—is of a trigger-happy, immature government that puts its perception of honor above rationality. After the so-called anti-corruption crackdown last year, which was used to supply fresh funds to the cash-strapped state coffers, investors are already wary enough of Riyadh’s plans and tactics and the row with Canada won’t help improve its international image.
By Irina Slav for Oilprice.com
