Opec+ cut shows widening gulf between Biden and Saudis

Published October 9, 2022
Although US officials travelled to Saudi Arabia last month, they failed to prevent an Opec+ output cut. Riyadh reportedly told the US, which is the world’s top producer and consumer of oil, that it should ramp up its own production.—Reuters
Although US officials travelled to Saudi Arabia last month, they failed to prevent an Opec+ output cut. Riyadh reportedly told the US, which is the world’s top producer and consumer of oil, that it should ramp up its own production.—Reuters

WASHINGTON: The Opec+ organisation’s decision this week to cut oil production despite stiff US opposition has further strained already tense relations between President Joe Biden’s White House and the Saudi Arabia’s royal family, once one of Washington’s staunchest Middle East allies, according to interviews with about a dozen government officials and experts in Washington and the Gulf.

The White House pushed hard to prevent the Opec output cut, these sources said. Biden hopes to keep US petrol prices from spiking again ahead of midterm elections in which his Democratic party is struggling to maintain control of the US Congress. Washington also wants to limit Russia’s energy revenue during the Ukraine war.

The US administration lobbied Opec+ for weeks. In recent days, senior US officials from energy, foreign policy and economic teams urged their foreign counterparts to vote against an output cut, according to two sources familiar with the discussions.

Amos Hochstein, Biden’s top energy envoy, along with national security official Brett McGurk and the administrations special envoy to Yemen Tim Lenderking, travelled to Saudi Arabia last month to discuss energy issues, including the Opec+ decision.

Washington’s handling of Iran N-deal, lack of support for military operations in Yemen seem to have upset royal family

They failed to prevent an output cut, just as Biden did after his own July visit.

US officials “tried to position it as ‘us versus Russia,’” said one source briefed on the discussions, telling Saudi officials they needed to make a choice.

That argument failed, the source said, adding that the Saudis said that if the United States wanted more oil on the markets, it should start producing more of its own.

America is the world’s No. 1 oil producer and also its top consumer, according to data from the US Energy Information Administration.

The Saudi government media office CIC did not respond to Reuters emailed requests for comment about the discussions.

“We are concerned first and foremost with the interests of the Kingdom of Saudi Arabia and then the interests of the countries that trusted us and are members of Opec and the Opec + alliance,” Energy Minister Prince Abdulaziz told Saudi TV Wednesday.

Opec weighs its interests with “those of the world because we have an interest in supporting the growth of the global economy and providing energy supplies in the best way,” he said.

Washington’s handling of the Iran nuclear deal and withdrawal of support for a Saudi-led coalition’s offensive military operations in Yemen have upset Saudi officials, as have actions against Russia after the February 2022 invasion of Ukraine.

A US push for a price cap on Russian oil is causing uncertainty, Energy Minister Prince Abdulaziz bin Salman told Bloomberg TV after the Opec cut, noting the “lack of details and the lack of clarity” about how it will be implemented.

A source briefed by Saudi officials said the kingdom views it as “a non-market price-control mechanism, that could be used by a cartel of consumers against producers.”

A Biden-directed sale of 180 million barrels of oil in March from the US Strategic Petroleum Reserve put downward pressure on oil prices. In March, Opec+ said it would stop using data from the International Energy Agency (IEA), a Western oil watchdog, due to Saudi-led concerns the United States had too much influence.

On Thursday, Biden called the Saudi decision “a disappointment”, adding Washington could take further action in the oil market.

“Look it’s clear that Opec Plus is aligning with Russia,” White House press secretary Karine Jean-Pierre said on Wednesday. She would not elaborate on how the output cut would affect US-Saudi relations.

In the US Congress, Biden’s Democrats called for the withdrawal of US troops from Saudi Arabia and spoke about taking back weapons.

“I thought the whole point of selling arms to the Gulf States despite their human rights abuses, nonsensical Yemen War, working against US interests in Libya, Sudan, etc, was that when an international crisis came, the Gulf could choose America over Russia/China,” Senator Chris Murphy, a Democrat, said on Twitter.

Saudi minister of state for foreign affairs Adel Al-Jubeir, said in remarks to Fox News on Friday when asked about the US criticism: “Saudi Arabia does not politicise oil or oil decisions.” “With due respect, the reason you have high prices in the United States is because you have a refining shortage that has been in existence for more than 20 years,” he added.

Ben Cahill, a senior fellow at the Center for Strategic and International Studies, said the Saudis hope the production cuts will give Opec+ control over oil prices and ensure enough oil revenue to protect their country from a recession.

“The macroeconomic risk is getting worse all the time, so they have to respond,” Cahill said. “They are aware that a cut will irritate Washing­ton, but they are managing the market.”

Published in Dawn, October 9th, 2022

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