Tyler Cowen, Columnist

The U.S. Needs Saudi Arabia, and Vice Versa

It’s worth reviewing why the relationship has been so strong for so long.

October 22, 2018 at 9:30 AM UTC

Tyler Cowen is a Bloomberg Opinion columnist, a professor of economics at George Mason University and host of the Marginal Revolution blog.

Sign of the times.
Photographer: Fayez Nureldine/AFP/Getty Images

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Following the murder of Jamal Khashoggi, there have been many calls for reexamining the U.S.-Saudi relationship, even for imposing sanctions. As an economist, I understand there are diplomatic fine points to this relationship that lie beyond my expertise, but still: It is worth reviewing the economic and exchange-based reasons why U.S.-Saudi relations have been so robust.

First, trade between the U.S. and Saudi Arabia is currently about $24 billion per year. You might think that the U.S. is now energy-independent, but many U.S. allies, most notably Japan, rely on oil imports. Part of the larger U.S. foreign policy stance is promising those allies freedom from major supply disruptions.