Saudi Arabia's role in global energy markets is changing. The kingdom is reshaping itself as a supplier of refined petroleum products while moving beyond its long-held role as a simple exporter of crude oil. This change is commensurate with the typical development trajectory of a state progressing to a more advanced stage of global economic integration. Gains from increased refining include reducing fuel imports and capturing margins now bequeathed to competitors. Refining also allows the kingdom to export its heavy crude oil to a wider array of customers, beyond select importers configured to handle heavy crudes. However, the move also presents strategic complications. The world's "swing supplier" of oil may grow less willing or able to adjust supply to suit market demands. In the process, Saudi Arabia may have to update the old “oil for security” relationship that links it with Washington, augmenting it with a more diverse set of economic and investment ties with individual companies and countries, including China.
Read the full article in Energy Policy.
