The United States and Saudi Arabia appear to have reached an understanding: Washington will reduce or eliminate Iran’s oil export revenues and in return Riyadh will guarantee oil supplies and stabilise prices. The basic deal is well understood by policymakers in both countries, with U.S. President Donald Trump repeatedly emphasising his great personal relationship with the Saudi king and crown prince.

But strong personal relationships between the leaders and agreement on the overall deal obscure disagreement on some key details, not least the desirable level for oil prices. Saudi Arabia and its allies believe prices should be stabilised around $75 a barrel. Trump, meanwhile, clearly thinks they should be stabilised at a significantly lower level. THE BASIC DEAL Trump made the link between Iran sanctions and Saudi production policy explicit in a television interview with Fox News on July 1. The United States will counter the influence of Iran, Saudi Arabia’s major regional riva...

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