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Saudi Arabia is the biggest beneficiary of the war in Ukraine

As leaders congratulate themselves for shunning Russian oil, Saudi Aramco becomes the world’s most valuable company.

By Philippa Nuttall

Switching off Russian gas could put the planet on the road to a green economy, I wrote naively in the New Statesman on 9 March. The war in Ukraine had begun a couple of weeks previously, causing many EU countries to reconsider the practical and ethical implications of being so reliant on Moscow’s fossil fuels to power their economies.

Politicians across Europe reacted by urging an accelerated transition to renewable energy. The International Energy Agency suggested people turn down their heating and wear a jumper in response to Vladimir Putin’s invasion. People boasted on social media that they were #standingwithUkraine by switching off their gas boilers even though it was chilly outside. 

Cracks in the resolve began to show up immediately. Amid calls for more solar, wind and nuclear power, the UK government started to double down on domestic oil and gas production, and Boris Johnson, the Prime Minister, flew to Saudi Arabia to ask the regime to increase its oil output

Yesterday (15 May) Saudi Aramco, the state-owned company that is the world’s biggest oil exporter, reported its highest quarterly profits since listing its shares in 2019. Last week it overtook Apple as the world’s most valuable company. BP, ExxonMobil and Shell have likewise benefited significantly from the high oil prices aggravated by the war in Ukraine. After reaching a 14-year high of $139 a barrel in March, Brent crude oil is now trading at about $110 a barrel, roughly two thirds higher than a year ago.

Oil production decreased globally during the Covid-19 lockdowns as demand fell. Some fossil fuel giants, such as Shell and BP, have pledged to very gradually reduce oil output as part of their promised transition towards cleaner energy sources. Saudi Aramco, however, serenely plans to channel its record-breaking profits into ramping up its oil and gas output. “Energy security is vital and we are investing for the long term, expanding our oil and gas production capacity to meet anticipated demand growth,” Amin Nasser, Aramco’s chief executive.

The war in Ukraine has changed the discourse on energy, but not necessarily in the way that climate activists were hoping for. In addition to calls, on paper at least, to accelerate the energy transition, “security” is gaining every greater prominence.

After protesters interrupted a business lunch attended by Kwasi Kwarteng, the UK’s business and energy secretary, last week, he tweeted: “Shout and scream all you like, but I’m not going to put Britain’s energy security at risk by shutting off domestic oil and gas production. We will need oil and gas for decades to come.” Likewise, the EU’s plan to ban imports of Russian oil look increasingly shaky as Hungary, which is highly reliant on fossil fuel imports from Moscow, refuses to back the proposal in the name of energy security.

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The main beneficiary of Saudi Aramco’s profits is the Saudi Arabian government, which owns 94 per cent of the company’s stock. As countries and companies pat themselves on the back for their efforts to reduce their dependence on Russian fossil fuels, it is worth keeping in mind what’s happening in Saudi Arabia.

This is the country whose government was accused by Agnès Callamard, a UN special rapporteur, of being responsible for the “deliberate, premeditated execution” of Jamal Khashoggi, a former Washington Post journalist and critic of the Saudi government. It is likewise a Saudi-led coalition that is behind the years of violence in Yemen in which hundreds of thousands of people have been killed, and which has led to widespread hunger and disease.

Courts in Saudi Arabia resort extensively to the death penalty, executing people for a wide range of crimes, while refugees and migrants suffer “unlawful killings, indefinite arbitrary detention in life-threatening conditions, torture and rape”, reported Amnesty in March. Days before Johnson arrived to negotiate on oil, the country executed 81 men in 24 hours.

This morning (16 May) Alok Sharma, president of Cop26, returned to Glasgow six months after the international climate conference ended. The world has changed in many ways since then, and any optimism felt as the doors closed on the event has long gone. Sharma cited the ever more urgent warnings from climate scientists that action is needed to reduce emissions, and underlined the security issues posed by a warming world as extreme weather events including heatwaves, drought and flooding become more frequent, with dire impacts on people and their environments.

The war in Ukraine and other global crises “should increase, not diminish, our determination to deliver on what we agreed here at Cop26”, Sharma insisted. Failing to act on promises made at the summit would be “an act of monstrous self-harm”. That means rapidly reducing our use of fossil fuels, wherever they come from.

[See also: China’s global coal machine won’t be stopped so easily]

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