OPEC+, a grouping that includes Saudi Arabia and its Organization of Petroleum Exporting Countries plus Russia, slapped President Joe Biden’s pleas for increased oil production aside with a smaller-than-expected boost for August — and production cuts are reportedly on the table for September.
Saudi Energy Minister Prince Abdulaziz bin Salman, a highly influential voice within OPEC+, suggested on Monday that reduced production could be necessary to stabilize markets because recession fears and the war in Ukraine drove global markets into “a state of schizophrenia” and reduced demand for oil.
Abdulaziz also defied the Biden administration by insisting Russia remains a member in good standing of OPEC+ and hinting its status may remain unchanged when a new OPEC+ agreement is drafted in the near future.
“The comments are the latest indication that Mr. Biden’s July visit to Jeddah didn’t help toward lower prices at American gas stations, and are the opposite of what the Biden administration hoped to achieve during the president’s trip to the kingdom in July,” the Wall Street Journal (WSJ) observed.
King of Saudi Arabia, Salman bin Abdulaziz Al Saud (right) and Crown Prince of Saudi Arabia Mohammad bin Salman (L) attend the 39th Gulf Cooperation Council (GCC) Summit in Riyadh, Saudi Arabia on December 9, 2018. (Bandar Algaloud/ Saudi Kingdom Council/Handout/Anadolu Agency/Getty Images)
The WSJ recalled Biden administration officials confidently predicting the Saudis would increase oil output after Biden’s visit to the Kingdom, including a prediction of “positive announcements coming out of the next OPEC meeting.”
In this photo released by Saudi Press Agency (SPA), Saudi Crown Prince Mohammed bin Salman, right, greets President Joe Biden, with a fist bump after his arrival in Jeddah, Saudi Arabia, Friday, July 15, 2022. (Saudi Press Agency via AP)
Instead, OPEC increased production by a paltry 100,000 barrels per day for the coming month and is now talking about outright cuts. The Saudis publicly disputed some of Biden’s comments about his meeting with Crown Prince Mohammed bin Salman and expressed their displeasure at Biden’s reckless efforts to restore the Iran nuclear deal.
Analysts on Tuesday mentioned the possible return of Iranian oil to world markets as one reason OPEC may begin ramping down its own production.
The Biden administration has been comically scrambling to squeeze some political benefit from reduced gas prices, even though recent improvements at the pump were entirely due to the looming threat of a recession and cratering demand from China. A hint of times to come was given when oil prices climbed $1.30 a barrel overnight, merely because Abdulaziz talked about production cuts.
Even as Biden was leading America into a recession, Saudi Arabia posted 11.8-percent economic growth driven by record oil profits.