Could Saudi Arabia take steps to punish America? In the wake of the disappearance, and presumed murder, of journalist Jamal Khashoggi, it's a pertinent question. Theoretically, the Saudi government could punish the US financially, and inflict some heavy losses. The Kingdom would also respond strongly to US President Donald Trump's threats to inflict harsh punishment on Riyadh if it is found to have been involved in the assassination of the Saudi journalist.
In theory, of course, the Saudis could punish the whole world and deprive thousands of people, power plants, factories and companies of fuel. The Kingdom has the potential to influence important global markets. This is especially true in the case of the energy and financial sectors.
If Riyadh decided to use the oil weapon, the prices of commodities and raw materials would rise, not least because Saudi Arabia is the largest producer of oil among OPEC members. It produces about 11 million barrels per day, of which at least 7 million are exported. Media figures affiliated with the Saudi regime have hinted at the potential use of this weapon. US citizens would be amongst the first to be affected.
This would give Trump a jolt, as he has boasted about his economic prowess and ability to lower America's unemployment and inflation rates despite global price hikes. He also boasts of his ability to create thousands of jobs in America by increasing Saudi investment. Indeed, he has been pushing the Saudis to increase oil production by 2 million barrels a day to compensate for the shortage from Iran, Venezuela and Libya, and the resultant higher prices.
The use of the oil weapon by the Saudis could also influence the US mid-term congressional elections, putting the Trump administration on the spot. If he loses control of the Senate and House of Representatives, The US President would have difficulty in passing controversial legislation, such as the Tax Reform Act.
If the Saudis also decide to withdraw the Kingdom's investments from the US — estimated at $1 trillion — it could crash the American financial and business sector. Banks would also be placed in a very difficult position if Saudi deposits were taken elsewhere. What's more, Riyadh currently holds around $165 billion in US bonds. What would happen if it decided to cash them in?
It would also be a huge embarrassment to Trump if Riyadh cancelled or froze the massive arms deals, said to be worth $110 billion to the US economy. American arms manufacturers would want answers from the White House.
All of this, of course, is dependent on the political will existing in Riyadh to retaliate if Trump takes steps to punish Saudi Arabia for what has happened to Jamal Khashoggi. Could, or would, the Saudis actually respond to any US or Western sanctions against the Kingdom with even more serious measures, as one official claimed this week?
Despite the possibilities and options open to it, it is doubtful if Saudi Arabia would actually take steps to punish America. Apart from anything else, the country has never withdrawn as much as one cent from the US, even in times of stress in its relationship with Washington.
Moreover, its own economy depends on oil production, and it is unlikely that it could withstand losing 95 per cent of its revenue for any meaningful length of time. There are also major restrictions on withdrawing foreign funds from US banks or even pulling investments out of companies and the selling of shares.
In reality, therefore, the options available to Saudi Arabia to respond to possible US sanctions are limited. The cards held by Riyadh are duplicated in the hands of others, including its potential adversaries in the fallout of the Khashoggi affair. We are unlikely to see much happening of any great significance.
This article first appeared in Arabic on The New Khaleej on 18 October 2018.
Note: This page was updated at 18:30 BST on July 2, 2019. The previous version of this page incorrectly carried the byline of "Mostafa Saleem". The correct author for this piece is "Mostafa Abdelsalam"
The views expressed in this article belong to the author and do not necessarily reflect the editorial policy of Middle East Monitor.