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Saudi Arabia’s Oil Addiction: 5 Geopolitical Effects You Need to Know

1. Saudi couldn’t resist Indian oil refinery

Despite making clear their intentions to diversify from oil, Saudi seems unable to resist temptations to increase oil production when new opportunities arrive. Last year, When Saudi Aramco was on the verge of a deal to buy a stake in an Indian oil refinery, its boss quickly boarded a company jet in Paris and flew to New Delhi, and signed the agreement himself, highlighting its importance to the Saudi rulers. It secured the plans for investing $44 billion into India’s West Coast oil refinery.

2. Aramco to complete East-West pipeline expansion by September

Saudi Aramco expects to finish expanding its East-West pipeline by September, which would increase the amount of oil it can export from the Red Sea rather than the Persian Gulf and, crucially, would allow it to avoid the Strait of Hormuz. Hence we see that Saudi continue to grow their oil export levels, supporting the claim that they have an oil addiction that will be hard to tame.

3. Neutral oil production zone to be re-opened

In addition to the new pipeline, OPEC members Saudi Arabia and Kuwait have discussed resuming oil production in jointly operated fields in the Saudi–Kuwaiti Neutral Zone, Kuwaiti state news agency KUNA said yesterday. The Saudi–Kuwaiti Neutral Zone, or Divided Zone, is an area of 5,770 square km between the two countries’ borders that was left undefined when the border was established in 1922. Saudi and Kuwait had both stopped the output from the oilfields 4 years ago. The 2 countries are now close to an agreement to resume production in the neutral zone.

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