Analysts don't expect Saudi Arabia and its allies to make a major policy decision at this weekend's meeting of oil- producing nations, but the Saudis face another challenge: appeasing President Donald Trump while keeping the kingdom's vision for a grand alliance of crude producers on track.
Trump wants the Saudis to boost output to prevent oil prices from spiking as his administration restores sanctions on Iran, OPEC's third biggest producer and Riyadh's chief regional rival. If Saudi Arabia had any doubts about Trump's expectations, the president reminded OPEC in an early morning tweet on Thursday.
@realDonaldTrump: We protect the countries of the Middle East, they would not be safe for very long without us, and yet they continue to push for higher and higher oil prices! We will remember. The OPEC monopoly must get prices down now!
But Saudi Arabia faces threats to its leadership among roughly two dozen oil-producing nations if those countries perceive the kingdom is doing Washington's bidding at their expense.
This weekend at a meeting in Algeria, the Saudis hope to advance their goal of making the ad hoc alliance — formed two years ago to end a devastating oil price downturn — more permanent ahead of its next major meeting in December. The 15-nation OPEC cartel and a group of other producers led by Russia have voluntarily throttled back their output since 2017 to boost oil prices. Now, the Saudis and OPEC want to institutionalize the alliance.
"The Saudis do want to have as amicable a discussion as possible, and they want to prepare for the launch of this organization in December. That argues against rubbing new supply in Iran's face. They have a balancing act to strike," said Robert McNally, president and founder of Rapidan Energy Group.
While kowtowing to Trump could raise questions about Saudi leadership, failing to send a clear signal to the mercurial U.S. president could put OPEC in Trump's crosshairs.
This comes as Congress has revived legislation aimed at preventing OPEC from manipulating oil prices. Analysts say the Saudis are likely worried Trump will back the bipartisan legislation if OPEC crosses him, something presidents George W. Bush and Barack Obama refused to do.