Daily Management Review

Growing Schism Between Biden And Saudi Royals Revealed By OPEC+ Oil Output Cut


Growing Schism Between Biden And Saudi Royals Revealed By OPEC+ Oil Output Cut
According to interviews with about a dozen government officials of the United States and experts in Washington and the Gulf, the OPEC+ organization's decision this week to cut oil production despite stiff US opposition has strained already strained relations between President Joe Biden's White House and Saudi Arabia's royal family, once one of Washington's staunchest Middle East allies.
According to these sources, the White House worked hard to prevent the OPEC output cut. Biden hopes to keep gasoline prices in the United States from rising again ahead of the midterm elections, in which his Democratic Party is fighting to keep control of the United States Congress. During the Ukraine conflict, Washington also wants to limit Russia's energy revenue.
For weeks, the US administration lobbied OPEC+. According to two sources familiar with the discussions, senior US officials from the energy, foreign policy, and economic teams have recently urged their foreign counterparts to vote against an output cut.
Amos Hochstein, Biden's top energy envoy, traveled to Saudi Arabia last month with national security official Brett McGurk and the administration's special envoy to Yemen Tim Lenderking to discuss energy issues, including the OPEC+ decision.
According to one source briefed on the discussions, US officials "tried to position it as 'us versus Russia,'" telling Saudi officials they needed to make a choice.\
According to the source, that argument failed because the Saudis said that if the US wanted more oil on the market, it should start producing more of its own.
According to the US Energy Information Administration, the United States is both the world's largest producer and consumer of oil.
The Saudi government's media office, CIC, did not respond to Reuters' emails seeking comment on the talks.
"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 balances its interests with "those of the world because we have an interest in supporting global economic growth and providing energy supplies in the best way possible," he said.
Saudi officials have been irritated by Washington's handling of the Iran nuclear deal and withdrawal of support for a Saudi-led coalition's offensive military operations in Yemen, as well as actions against Russia following the February 2022 invasion of Ukraine.
The United States' push for a price cap on Russian oil is causing uncertainty, according to Saudi Energy Minister Prince Abdulaziz bin Salman, who noted the "lack of details and clarity" about how it will be implemented after the OPEC cut.
According to a source briefed by Saudi officials, the kingdom sees it as "a non-market price-control mechanism that could be used by a consumer cartel against producers."
Oil prices fell as a result of a Biden-directed sale of 180 million barrels of oil from the US Strategic Petroleum Reserve in March. OPEC+ announced in March that it would no longer use data from the International Energy Agency (IEA), a Western oil watchdog, due to Saudi-led concerns that the US had too much influence.
On Thursday, Biden described the Saudi decision as a "disappointment," adding that Washington may take additional 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 declined to comment on how the output cut would affect US-Saudi relations. Biden's Democrats in the United States Congress called for the withdrawal of US troops from Saudi Arabia and the return of 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.
When asked about the US criticism, Saudi Minister of State for Foreign Affairs Adel Al-Jubeir told Fox News on Friday, "Saudi Arabia does not politicize 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.