Gulf partners will have many questions for US energy secretary

• Chris Wright begins Gulf visit today
• Trip coincides with plunging oil price
• US energy investments top agenda

US energy secretary Chris Wright arrives in the Gulf today at an especially turbulent time in the global economy and as oil prices plunge to more than four-year lows.

Wright’s two-week visit to Saudi Arabia – the world’s second-largest oil producer – the UAE and Qatar may be in preparation for Donald Trump’s own trip to the region next month, according to energy industry professionals. 

But the secretary is likely to field a barrage of questions from regional partners about the US president’s whipsaw approach to economic policymaking and its impact on international trade, the global economy and energy markets.

“While Wright may hope to establish the parameters for solid dealmaking that Trump can announce, it is probable that his host officials will seek reassurance over the tariff uncertainty and trading volatility,” said Kristian Coates Ulrichsen, co-director of the Baker Institute’s Middle East Energy Roundtable. 

“[They] will seek to impress upon Wright the need for a stable and predictable economic climate to deliver the wins Trump would like to see.”

Brent crude lost $2.13, or 3.4 percent, to $60.69 a barrel as of 01:08 GMT on Wednesday, its lowest since March 2021. US West Texas Intermediate (WTI) crude futures fell $2.36, or almost 4 percent, to $57.22, its lowest since February 2021. 

Brent has plunged almost 20 percent in the week since April 2, the day President Trump announced a near-tripling in effective US tariff rates on imports to an estimated 25 percent, the most in a century.

Trump made lower oil prices a key campaign pledge before elections in November, but oil prices today are well below many GCC countries’ fiscal breakeven point. 

This raises questions about the future of economic diversification efforts in the world’s largest oil producing region, including financing for Saudi Arabia’s own Vision 2030 economic and social development strategy.

That perhaps is the biggest underlying tension in an otherwise close relationship between the region and the US.

“It may be irony more than symbolism, in that secretary Wright’s background is more sympathetic to the woes of oil companies that are pressed by the sharp decline in oil prices,” said Karen Young, a senior researcher at Columbia University’s Center on Global Energy Policy.

Wright is the founder of oilfield services company Liberty Energy, whose share price has fallen nearly 37 percent in the past five days.

Fracking in the US shale patch is even more sensitive to lower oil prices than production in the Gulf. Saudi Arabia, for instance, is among the lowest-cost oil producers in the world and has previously used pricing to drive out competitors.

Officials in the Gulf Cooperation Council economic and political bloc – Saudi Arabia, the UAE, Qatar, Kuwait, Oman and Bahrain –  may find comfort in Wright’s oil services background and find him receptive to their messages, according to Colby Connelly, a senior fellow at the Middle East Institute in Washington.

“Someone like Wright is going to be well aware of the fact that you can’t have “drill, baby, drill” with very low oil prices,” Connelly said. “Those are goals that are diametrically opposed to each other. It’s a difficult balance to strike.”

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Gulf investments in the US energy industry – ranging from oil and gas and renewables, to nuclear technology and electricity enhancements to support data centres – will also be top of the agenda, people familiar with the matter say.

Saudi Arabia has pledged to trade and invest $600 billion over President Trump’s four-year term, though he has called on the largest Arab economy to make that $1 trillion instead.

The UAE federation, which includes oil producer Abu Dhabi, has pledged a $1.4 trillion investment framework in the US over ten years.

“I’m visiting some critical allies for the United States that we want to strengthen relationships with,” Wright said in an interview with Fox News on Tuesday.

“Most importantly, perhaps, all of the three nations I’m visiting are all very keen to make very large investments into the United States, measured in the hundreds of billions of dollars a year.”