WASHINGTON — OPEC’s move to cut oil production on Wednesday has significantly undermined President Biden’s efforts to avoid rising gas prices ahead of the midterm elections, which Russia is using to pay for war in Ukraine. Relieve his pressure to curb oil revenues.
It also exposes a diplomatic failure at his fist over the summer with the Saudi crown prince.
Both optically and substantively, moves by OPEC and its oil-producing allies highlight the foreign and economic policy challenges facing the United States at a time when the global economy is on the brink of recession; Part of the Ukrainian conflict where politics emerged as a key.
The decision was made during a meeting at OPEC’s Vienna headquarters attended by the deputy prime minister of Russia under US sanctions. This follows a concerted but ultimately unsuccessful diplomatic effort by Washington to halt oil production cuts, leaving Biden with far less influence over the Gulf states than he hoped. indicates that
And, even in an era when oil is becoming less important as an energy source, OPEC+ has demonstrated once again that it will act in its own interest. In this case, it proved much more important to Member States to maintain prices per barrel than to make Russia pay for its invasion of Ukraine.
The meeting of the OPEC plus energy cartel, led by Saudi Arabia and Russia, has resulted in a series of diplomatic and economic issues affecting everything from US domestic politics to the war in Ukraine.
For days, the White House tried to block the 2 million barrel-a-day cut. It called on several of the Arabs’ closest allies, including Saudi Arabia, which Biden visited in July, to meet with Crown Prince Mohammed bin Salman over the objections of human rights groups and his own advisers.
Officials at the time said he took risks to address various national security concerns, most of them to boost oil supplies. Biden concluded that Washington approved the assassination of his Post journalist Jamal Khashoggi in 2018.
The quiet understanding gained from this visit is that Saudi Arabia will increase its production by about 750,000 barrels per day, and that the United Arab Emirates will follow suit with an additional 500,000 barrels per day, pushing down gas prices and allowing President Vladimir V. Putin to was to worsen the funding capacity of It’s been a much longer and far more deadly war than Mr. Biden expected.
However, the increase in production was short-lived. Saudi Arabia increased production significantly in her July and her August, but withdrew a promise to keep it at that level for the rest of 2022. Its leader and all her OPEC were concerned that the specter of a global recession was driving prices down from $120. Barrel went below $80 for him over the summer. Below that level, they fear, budgets will have to be cut, threatening social stability. As such, the Saudis decided that action needed to be taken.
President Biden
With the midterm elections approaching, here stands President Biden.
The production cuts announced Wednesday would cut global daily output by about 2%, but some of them are phantom cuts as members of the group are already not producing enough from their targets. But experts estimate that the price impact could be greater, at more than 15 to 30 cents per gallon at the pump.
And it was perfect timing for Mr. Biden, with the midterm elections only a month away.
But the decision shatters any sense that, beyond inflation and political ramifications, the Arab allies have signed on to the cause of making Russia, which is also a member of the OPEC+ group that met in Vienna, pay the price.
It wasn’t surprising. Iran is a member of this group and in recent months has moved closer to Russia and even sold drones to prosecute its war in Ukraine.
Among those attending the meeting was Russian Deputy Prime Minister Alexander Novak, who is under US sanctions for his contribution to Russia’s aggression in Ukraine.
Novak has played a central role in working with other oil producers, seeking ways to circumvent attempts by the United States and Europe to cap the price of Russia’s oil exports. At the post-meeting press conference in Vienna, he was conspicuously absent.
Russia’s efforts to keep oil prices down are now in jeopardy. OPEC+’s decision was made in order to offset the steep discounts Russia has been forcing China and other countries in exchange for its willingness to ignore its efforts to isolate the country. Helps you enjoy the price. Essentially, production cuts increase revenues for all OPEC+ countries, including Russia and Iran.
The White House said in a statement from National Security Advisor Jake Sullivan and National Economic Council Chairman Brian Deeds that Biden was “OPEC+’s shortsightedness to cut production quotas amid a turbulent global economy.” I am disappointed with the decision,” he said. “He continues to be affected by Putin’s invasion of Ukraine.” They said he would “consult Congress on additional tools and powers to reduce OPEC’s control over energy prices.”
The Saudi side was relentless.
Saudi Oil Minister Prince Abdulaziz bin Salman told reporters of the effort to push up prices: “We would rather be preemptive than sorry.” He said nothing about a quiet agreement with Washington in July.
The level of anger and surprise in the White House was palpable. On Tuesday, spokeswoman Carine Jean-Pierre told reporters that she was “not considering any new releases” from the country’s strategic oil reserves beyond what Biden had previously announced. Then, less than 24 hours later, on Wednesday morning, with OPEC production cuts looming, the White House statement said, “The president will ensure that oil reserves are properly maintained to protect American consumers and promote energy security.” We will continue to direct new releases from
“With today’s announcement, it is clear that OPEC+ is aligned with Russia,” Ms Jean-Pierre said Wednesday.
The official did not say Mr Biden regretted the gunfight with Prince Mohammed. This represents his decision to move forward from his stated goal of making Saudi Arabia pay for the gruesome killing and amputation of Mr Khashoggi. . Biden never mentioned the dissident and former Washington Post columnist by name when he appeared with Prince Mohammed. (Mr Biden later told reporters that the murder was “outrageous” and that he had personally confronted the prince, saying, “I have made my views very clear.”)
Officials said at the time that Saudi Arabia had made significant progress toward ending the war in Yemen, which it helped prosecute, and was moving in stages toward eventual recognition of Israel by Saudi Arabia. Saudi Arabia’s decision to ignore pressure from the United States in favor of oil production cuts by the United States marked yet another step in the strategic distance between the two historic partners.
If there is any lesson to be learned from Mr. Biden’s bitter experience, it is that American presidents seek favors from Saudi allies and do so simply to improve relations or ensure America’s continuity. It means that the time when you can expect A promise to protect the kingdom from foreign attacks.
Prince Mohammed has deliberately distanced himself from Washington and has developed extensive international ties, particularly with China and Russia. He also clarified that he does not view Saudi Arabia as a junior partner of the United States and that he will gladly ignore any demands he deems contrary to Saudi Arabia’s interests.
Since the beginning of the Biden administration, this dynamic has manifested itself in interactions between the crown prince and Mr. Biden. But that’s never been clearer than in recent months when Mr. Biden and his entourage claimed it was time to reset their relationship. And Saudi Arabia’s apparent agreement to increase oil production to lower international prices was part of the payoff.
Wednesday’s cuts showed that the effects of that reset were short-lived or that Saudi Arabia had not fully considered the benefits of helping the US after Mr. Biden’s visit.
Some Gulf politics analysts see the move as a direct attack on Biden.
“It’s definitely political. It has nothing to do with money,” said Cinzia Bianco, a Gulf Studies Fellow at the European Council on Foreign Relations.
Saudis were disappointed with what they received from the United States after Mr. Biden’s visit to Saudi Arabia, she said.
“So whenever it made political sense to turn back and step up another strategy, they did,” she said.
Saudi analysts dismiss that characterization, reflecting statements by OPEC officials that the cuts were made for purely technical reasons.
Saudi analyst Ali Shihabi said: “This is certainly not a hostile anti-Biden act.
Shihabi said oil is a very important factor to the Saudi economy and to Prince Mohammed’s plans, and ensuring the profitability of this product trumps other concerns.
“They’re just trying to protect the lifeline of the economy,” he said. “This is the lifeblood of the kingdom, and everything in the kingdom depends on it.”
Other oil market watchers see the new cuts as a reflection of recent turmoil in global oil markets, including Russia’s invasion of Ukraine and an imminent global recession.
Saudi Arabia does not criticize Russian aggression. And efforts by European nations to cut off Russian oil and gas and suck money out of Putin’s war machine have sent much of that oil to Asia, with European nations pursuing other markets. .
Amid that turmoil, Saudi Arabia wants to show that oil is still important and can drive the market.
“This is certainly a Saudi power move,” said Karen Young, a senior fellow at the Center for Global Energy Policy at Columbia University. “They have established that they have the ability to create this market.”
David E. Sanger Reported from Washington, Ben Hubbard Originally from Istanbul.