164CONCLUSION: THE CLIMATE HEDGEfrom 5m b/d in 2008 to 9.3m b/d in 2017.^5 The shale boom revived popu-
list “energy independence” rhetoric, with pundits clamoring that shale
oil could free Washington from dependence on Saudi Arabia and other
“hostile” regimes. There is more heat than light here: the US remains a
net oil importer, and there is no conceivable short- run combination of
producers that could cover a disruption in the supply of Saudi oil. But
taken together, these strains have made it clear that the monarchy must
look to cement ties with other nations, most of them in the Far East.
Saudi Arabia is certainly not looking back. Important new ventures,
particularly in refining, are tethering the kingdom to Japan, South
Korea, and China, now the world’s largest oil importer.^6 By configur-
ing foreign refineries around Saudi crude oil, Saudi Aramco has locked
up market share in countries expected to dominate the future of oil
demand growth. Control of access to these growing markets also acts
as a strategic hedge in the event of a climate- induced reduction in oil
demand. In 2017, Aramco was negotiating further refinery stakes in
China as well as in Indonesia, India, and Malaysia.^7 The Kuwait Petro-
leum Co. did the same thing, buying a 35 percent share of a new refinery
in Vietnam.
These investments promote deeper integration with importing coun-
tries, converting them into stakeholders in the stability and security of
the Gulf producers. Diversified refining ties also allow Saudi Arabia and
its neighbors to guard against a future change of heart in Washington.
Despite the recent tensions, the relationship with the United States is still
a crucial one for Saudi Arabia, and the kingdom has taken steps to deepen
its involvement in US energy security. The huge Saudi Aramco– owned
Motiva refinery in Texas is the model. The refinery is configured around
Saudi crude, and Aramco supplies a large share of the 600,000 b/d of
crude oil that Motiva refines into gasoline and diesel. (Most of the fuel
is sold under the Shell brand.) Saudi Arabia can point to Motiva and sim-
ilar endeavors as a concrete rationale for the hard security Washington
provides in the Gulf region.
In one way or another, the Gulf ’s internal stability and prosperity, and
its external security and influence, all depend on oil.