UK’s Business With Saudi Arabia And Possible Impact Of US Sanctions

A lot apparently is at stake for the United Kingdom – Saudi Arabia relations if the Middle Eastern country has to face sanctions – especially from the United States in relation to its role in the murder of veteran journalist Jamal Khashoggi.

Threats of “severe punishment” for the kingdom have already been issued by US President Donald Trump if the country was found responsible.

There has been an increase of 120 per cent in the amount of goods that was exported from the UK to Saudi Arabia in 2017 at about £4.2 billion compared to the exports to the Middle Eastern country in the previous ten years.

The import from Saudi Arabia to the UK, pegged at £2.4 billion, is also double the amount in the previous ten years. Therefore, the UK enjoys a trade surplus of £1.8 billion with Saudi Arabia.

Machinery, aircraft, arms and vehicles – which includes £280 million worth of cars, are the top exports from the UK.

More than half of the imports from Saudi Arabia is accounted for by oil and includes both crude and refined oil. Machinery and electrical equipment, and photographic, cinematographic and medical equipment are the other goods in the trade.

Is has been more than a decade that UK has attained self sufficiency in oil with UK producing a crude oil from the North Sea and some from sources on land as well. About 3 per cent of British oil imports last year was from Saudi Arabia.

While UK being self sufficient in oil is an important aspect, one has to remember that if there is any sanction form the US on Saudi Arabia, it would disrupt the global oil market and would make oil from all sources and regions costlier and potentially by a significant amount.

UK exported £2 billion worth of services to Saudi Arabia in 2017. About a quarter of that amount in services was imported into the UK from Saudi Arabia. About £1.5 billion is the trade surplus of the UK in services.

Travel is the largest contributor in services trade on both sides.

The Saudi involvement in the Yemenese war gas raised serious debates about the supply of arms and weapons from the UK to the kingdom.

Britain is the second largest supplier of arms to Saudi Arabia – training the US and ahead of France, according to a research report by the Stockholm International Peace Research Institute which is a think tank which monitors the global weapons industry.

During the period of 2012-and 2017, Saudi Arabia imported nearly double the amount in arms and weapons compared to the previous five years.

China is the second largest single source of imports into Saudi Arabia followed by the United States. UK is in the ninth place on this list.

On the over all, the main goods that are imported into Saudi Arabia include machinery, vehicles and medicines.

And the kingdom itself majorly exports oil and gas which also includes goods for refineries such as diesel, petrol, jet fuel and raw materials for the petrochemical industry.

In 2016, Asia imported two thirds of the total oil exported by Saudi Arabia. Asia also accounted for 45 per cent of the total exports of refined products from the kingdom while Europe accounted for 40 per cent of the exports. Saudi Arabia is also the second largest source of imports of oil into the United States after Canada.

(Adapted form BBC.com)

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Categories: Economy & Finance, Geopolitics, Regulations & Legal, Uncategorized

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