An OPEC meeting in St Petersburg, Russia, in July 2017. Photo: Peter Kovalev/TASS via Getty Images

Between early August and early October, crude oil prices shot up by approximately $20 per barrel in anticipation of the Trump administration's Nov. 5 re-imposition of oil export sanctions on Iran. But in the first week of October, amid speculation of a $100-per-barrel market, crude prices suddenly reversed course.

Between the lines: The reversal illuminates the influence of geopolitics on the crude market, including the shifting role of Saudi Arabia as a major balancing force. Saudi Arabia ultimately bowed to U.S. pressure, but its hesitation speaks to an erosion of the U.S.–OPEC relationship as Russia’s influence has grown.

Background: Saudi Arabia initially declined to heed U.S. calls to increase crude oil production, and prices began to rise. Only in the wake of Jamal Khashoggi’s murder did the Saudi government committed to production increases.

The big picture: Concerns about high crude prices are giving way to worries about their precipitous fall, which has called attention to recent geopolitical shifts:

  • U.S. oil production is at record highs, but the U.S. neither owns nor controls the output, and so the U.S. can't use it as a geopolitical tool the way Saudi Arabia or Russia can.
  • Saudi Arabia’s reluctance to heed U.S. requests, along with OPEC and Russia’s agreement over production cuts through 2019, indicates that U.S. influence in the Middle East and over OPEC could be eroding.
  • The limitations of the Trump administration’s “U.S. energy dominance" strategy have also been exposed.

Meanwhile, Russian influence in the Middle East appears to be growing. This could be traced to the U.S. shale revolution and to U.S. sanctions on Iran, which bestow significant geopolitical benefits on Russia. Without additional supply from Iran, and as other OPEC producers like Venezuela are failing, OPEC faces serious difficulties balancing the global oil market with Russian cooperation.

What to watch: While the fallout from Khashoggi’s murder brought Saudi Arabia back in line with the U.S., this may prove a fleeting realignment. Russia is a beneficiary of the strain, particularly if the U.S is committed to squeezing the Iranian oil supply out of the market.

Anna Mikulska is a nonresident fellow in energy studies at Rice University’s Baker Institute's Center for Energy Studies and a senior fellow at the University of Pennsylvania's Kleinman Center for Energy Policy.

Go deeper

Updated 1 hour ago - Politics & Policy

Coronavirus dashboard

Illustration: Sarah Grillo/Axios

  1. Health: Fauci says U.S. may not return to normal until 2022 — Trump's testing czar: Surge "is real" and not just caused by more tests
  2. World: Taiwan reaches a record 200 days with no local coronavirus cases
  3. Europe faces "stronger and deadlier" wave France imposes lockdown Germany to close bars and restaurants for a month.
  4. Sports: Boston Marathon delayed MLB to investigate Dodgers player who joined celebration after positive COVID test.

In pictures: Storm Zeta churns inland after lashing Louisiana

Debris on the streets as then-Hurricane Zeta passes over in Arabi, Louisiana, on Oct. 28. It's the third hurricane to hit Louisiana in about two months, after Laura and Delta. Photo: Sandy Huffaker/Getty Images

Tropical Storm Zeta has killed at least two people, triggered flooding, downed powerlines and caused widespread outages since making landfall in Louisiana as a Category 2 hurricane on Wednesday.

The big picture: A record 11 named storms have made landfall in the U.S. this year. Zeta is the fifth named storm to do so in Louisiana in 2020, the most ever recorded. It weakened t0 a tropical storm early Thursday, as it continued to lash parts of Alabama and the Florida Panhandle with heavy rains and strong winds.

3 hours ago - World

Taiwan reaches a record 200 days with no local coronavirus cases

Catholics go through containment protocols including body-temperature measurement and hands-sanitisation before entering the Saint Christopher Parish Church, Taipei City, Taiwan, in July. Photo: Ceng Shou Yi/NurPhoto via Getty Images

Taiwan on Thursday marked no locally transmitted coronavirus cases for 200 days, as the island of 23 million people's total number of infections reported stands at 550 and the COVID-19 death toll at seven.

Why it matters: Nowhere else has reached such a milestone. While COVID-19 cases surge across the U.S. and Europe, Taiwan's last locally transmitted case was on April 12. Experts credit tightly regulated travel, early border closure, "rigorous contact tracing, technology-enforced quarantine and universal mask wearing" and the island state's previous experience with the SARS virus for the achievement, per Bloomberg.

Go deeper: As Taiwan's profile rises, so does risk of conflict with China