OPEC+ oil output cut shows widening rift between Biden and Saudi royals

WASHINGTON/LONDON, Oct 7 (Reuters) – The decision by the OPEC+ organization this week to slash oil production despite fierce US opposition has shattered already strained relations between President Joe Biden’s White House and the Saudi royal family Arabia, once one of Washington’s staunchest allies in the Middle East, remains incriminated after interviews with about a dozen government officials and experts in Washington and the Gulf.

The White House has been pushing hard to prevent OPEC’s production cut, these sources said. Biden is hoping to keep US gasoline prices from rising again ahead of the midterm elections, in which his Democratic Party is fighting to retain control of the US Congress. Washington also wants to limit Russia’s energy revenues during the Ukraine war.

The US government has been pushing for OPEC+ for weeks. In recent days, senior US officials on energy, foreign policy and economics teams have urged their foreign counterparts to vote against a production cut, according to two sources familiar with the discussions.

Sign up now for FREE unlimited access to Reuters.com

Amos Hochstein, Biden’s chief energy officer, traveled to Saudi Arabia last month to discuss energy issues, including the OPEC+ decision, alongside National Security Official Brett McGurk and the government’s special envoy for Yemen, Tim Lenderking.

They couldn’t avoid a production cut like Biden did after his own visit in July.

Also Read :  Golden Bears top Edison, Big Red | News, Sports, Jobs

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

That argument failed, the source said, adding that the Saudis said if the United States wanted more oil in the markets, they should start producing more of their own.

The United States is the world’s largest oil producer and also the largest 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 on the discussions.

“We have the interests of the Kingdom of Saudi Arabia first and then the interests of the countries that have trusted us and are members of OPEC and the OPEC+ Alliance,” Energy Minister Prince Abdulaziz told Saudi TV on Wednesday.

OPEC weighs its interests with “those of the world because we have an interest in supporting the growth of the world economy and providing the best possible energy supply,” he said.

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

A US push for a price cap on Russian oil is creating uncertainty, Energy Secretary Prince Abdulaziz bin Salman told Bloomberg TV after the OPEC cut, noting the “lack of detail and ambiguity” about how it will be implemented.

Also Read :  OPEC+ cuts attract funds back to oil market: Kemp

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

A Biden-led sale of 180 million barrels of oil by the US Strategic Petroleum Reserve in March put pressure on oil prices. In March, OPEC+ said it would stop using data from the International Energy Agency (IEA), a western oil watchdog, because the United States had too much leverage from Saudi Arabia.

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

“Look, it’s clear that OPEC Plus is allying with Russia,” White House press secretary Karine Jean-Pierre said Wednesday. She declined to elaborate on how the production cut would affect US-Saudi Arabia relations. In the US Congress, Biden’s Democrats called for the withdrawal of US troops from Saudi Arabia and spoke of the withdrawal of weapons.

“I thought the whole point of selling arms to the Gulf countries despite their human rights abuses, their senseless war in Yemen, working against US interests in Libya, Sudan, etc. was that in an international crisis, the Gulf America versus Russia/China could choose,” Sen. Chris Murphy, a Democrat, said on Twitter.

Also Read :  Russia’s War in Ukraine to Cost Global Economy $2.8 Trillion, OECD Says

CROWN PRINCE AND BIDEN

Weeks after Biden took office as president, Washington released a report linking the 2018 killing of journalist Jamal Khashoggi to Crown Prince Mohammed bin Salman.

The prince, son of King Salman, 86, has denied ordering the killing but admitted it was “under my supervision”.

The prince became prime minister last month and his lawyers have argued in a US court that this makes him immune to prosecution in the Khashoggi death.

Biden’s trip to Jeddah, Saudi Arabia, in July for a Gulf summit was aimed at putting ties back in order, but he also lashed out at bin Salman over the Khashoggi murder.

Ben Cahill, 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 sufficient oil revenues to protect their country from a recession.

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

Sign up now for FREE unlimited access to Reuters.com

Reporting by Steve Holland, Timothy Gardner and Jarrett Renshaw in Washington; Dmitry Zhdannikov in London, Aziz El Yaakoubi in Riyadh and Ghaida Ghantous in Dubai. Edited by Heather Timmons and David Gregorio

Our standards: The Thomson Reuters Trust Principles.

Leave a Reply

Your email address will not be published.