If oil prices are set based on the interests of producers, that's going to mean they're higher. Saudi wants to pay for its ambitious plans to build futuristic cities in the desert. They need oil prices north of $80 a barrel. If Russia wants to balance its books as it pays for its enormous war of aggression in Ukraine, it needs oil prices $100 a barrel or higher. And those higher oil prices, they stuff the coffers of the oil producers,. But for the oil consumers, US households, European households, US businesses, European businesses, they mean higher prices and that means higher inflation.
For decades, the United States and Saudi Arabia maintained an important strategic alliance, which gave the US access to Saudi oil in exchange for guaranteeing the kingdom’s security. But growing tensions between the two nations now threaten to rupture this relationship.
Bloomberg’s Ziad Daoud, Tom Orlik, and Nick Wadhams join this episode to explain what’s behind the US-Saudi rift, and why it could have far-reaching consequences for the US economy and potentially the 2024 presidential election.
Read the story: US-Saudi Oil Pact Breaking Down as Russia Grabs Upper Hand
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