The signing of a 20-year agreement for U.S. gas producer Caturus’s Commonwealth liquefied natural gas (LNG) division to supply one million tonnes per annum of LNG to Saudi Arabia’s Aramco is enormously significant both inside and outside the energy market. At a time when LNG has become the world’s most flexible instrument of energy statecraft, the decision by Aramco to lock in U.S. supply for two decades may speak to a deeper geopolitical recalibration underway in Riyadh. For Washington, meanwhile, the agreement offers a rare opportunity to re-anchor influence in a region where China and Russia have made rapid inroads over the past decade.
Within the energy sector, LNG became the key strategic energy source in an increasingly dangerous world after Russia invaded Ukraine on 24 February 2022. Unlike oil or gas transported through pipelines, LNG does not require years and vast expense to build a complex infrastructure before it is ready to transport. LNG can be shipped and moved anywhere within a matter of days and bought reliably either through short- or long-term contracts or immediately in the spot market. Consequently, it now has a massive geopolitical importance as well, which is only set to increase as global demand for it is estimated to rise by more than 50% by 2040, according to energy industry forecasts. That the U.S. is willing to engage with Saudi Arabia on a long-term contract in this vital energy sector may signal that the dramatic deterioration between the two countries seen from the 2014-2016 Oil Price War is continuing to reverse at pace, as analysed in full in my new book on the new global oil market order.
Before the 2014–2016 Oil Price War upended the global landscape, Saudi Arabia stood unchallenged as the dominant force in the oil world. Its vast reserves, production averaging just over 8 million barrels per day (bpd), and its de facto command of OPEC gave Riyadh extraordinary leverage. At that time, OPEC controlled roughly 40% of global crude output, around 60% of internationally traded petroleum, and more than 80% of proven reserves. The scale of that influence had been demonstrated most dramatically during the 1973–74 Oil Crisis — effectively the first modern oil price war — when the embargo drove prices from about US$3 per barrel to nearly US$11 and triggered a deep economic shock across the West, as also fully analysed in my new book/ Sheikh Ahmed Zaki Yamani, then Saudi oil minister and the architect of OPEC strategy, framed the episode as a turning point in the balance of power between resource?rich developing states and the industrialised nations dependent on their oil. Washington understood the message as clearly as anyone, a point underscored by Henry Kissinger during his tenure as National Security Advisor and Secretary of State. In the 1970s, the U.S. lacked the domestic production to shield itself from future embargoes — a vulnerability it resolved only decades later with the explosive growth of shale oil and gas from 2010–11 onwards.
Between the end of the 1970s crisis and the emergence of U.S. shale, relations between Washington and Riyadh had rested on the foundational deal struck on 14 February 1945 between U.S. President Franklin D. Roosevelt and Saudi Arabian King, Abdulaziz bin Abdul Rahman Al Saud, as also detailed in the book. The understanding was straightforward: Saudi Arabia would guarantee the U.S. the oil it needed for as long as its reserves lasted, and in return, the U.S. would safeguard the security of the Kingdom and the House of Saud. That equilibrium held for decades. But once U.S. shale began scaling up in the early 2010s, it became clear to Riyadh that its long-term market share — and by extension its geopolitical weight — was under threat. By 2014, Saudi Arabia concluded that the only way to blunt the rise of shale was to force prices down and test the sector’s resilience. The strategy backfired because, as also explored in detail in my book, U.S. shale producers slashed costs far faster than expected, emerging leaner and more competitive. The real damage fell on Saudi Arabia and OPEC, whose economies were battered and whose credibility in the market suffered.
By late 2016, with budgets strained and reputations bruised, Saudi Arabia and OPEC needed oil prices to recover — and they needed a heavyweight partner to help engineer that rebound. Russia stepped into the role, backing coordinated production cuts and giving birth to the OPEC+ alliance. This deepened the rift with Washington, which already viewed both the 1973–74 embargo and the 2014–2016 price war as breaches of the 1945 pact. As relations cooled, Riyadh moved closer to Moscow and, crucially, to China — a country that had offered financial support during the price war, including a proposal to buy a substantial stake in Aramco. The extent of this strategic pivot became unmistakable with the China-brokered restoration of ties between Saudi Arabia and Iran on 10 March 2023. Meanwhile, U.S.–Saudi relations deteriorated to the point that Riyadh declined to take President Joe Biden’s call in 2022 when he sought help in lowering oil prices after Russia’s invasion of Ukraine.
That said, the robust approach of Donald Trump in his second term as U.S. President appears to have catalysed a major adjustment in attitude from Riyadh. The Washington and London expedited removal of longtime President Bashar al-Assad from Syria was proof to any longstanding leader anywhere in the world that the same fate could happen to them at any time. The fact that it also occurred in a country that had been under the close protection of Russia, as also analysed fully in my book, was not lost on Riyadh either. Moreover, increased sanctions on Moscow from the U.S., Great Britain, and Europe made it seem even less likely to the Saudis that the Kremlin would be a palpable force again across the Middle East any time soon. On the positive side for Riyadh was the dramatically increased action taken by the U.S. against the previously rising regional security threat posed by Iran. Moreover, the resurgence of Trump’s first-term presidential plan of a broad network of Middle Eastern countries allied under a series of ‘relationship normalisation’ deals with the U.S. held out of the idea of greater stability for Saudi Arabia too, particularly if it could position itself as a close ally again to Washington.
For Washington, this latest LNG supply deal to Saudi Arabia marks an extraordinary reversal of its previous energy dependency on the Kingdom. Since the end of the 2014-2016 Oil Price War, the U.S. has not only become the world’s number one crude oil producer by a long way, but its top natural gas producer, and LNG producer too. In an irony unlikely to be lost on President Trump, U.S. firms have been providing assistance to Saudi Arabia in the development of its landmark Jafurah shale gas development since around 2019. An early notable participant was the U.S.’s National Energy Services Reunited Corp., which has conducted large-scale hydraulic fracturing operations across the relevant sites. From an investment perspective the U.S. has also played a key role in the shape of financial giant BlackRock that led a consortium to invest around US$11 billion in Jafurah’s midstream infrastructure. The newest Commonwealth LNG deal is part of the firm’s overall Phase 1 development, which aims to generate US$3.5 billion in annual export revenue, with operations beginning in 2030. At the same time, the Golden Pass LNG ?project jointly owned by the U.S.’s ExxonMobil and QatarEnergy, pulled in 300 million cubic feet of ?gas on ?Wednesday as it moves closer to making its first LNG. According to company data, it will produce 18 million metric tons per annum when complete, making it one of the largest U.S. LNG export facilities. It should also further cement the U.S.’s position as the world’s number one LNG producer, and further underline to Middle Eastern energy producers that their energy hold over the U.S. and its allies has gone.
