US will pump countless barrels of oil to mitigate OPEC+ decision

OPEC+'s expertise in limiting oil production was a decision that did not sit well with the White House, underlining how badly the relationship between the US and Saudi Arabia has deteriorated. Saudi Arabia said the cuts were an attempt to ease market volatility, and stressed that relations with the US must be based on trust. A reference to which both President Joe Biden and Secretary of State Antony Blinken, in their statements, warned the Saudi kingdom that such actions would have consequences.

The sharply public backlash reflects growing unease within the White House now that it has little to show for Biden's outreach to the Saudis, which he was forced to do as fuel costs soared over the summer despite his campaign pledge to treat Crown Prince Mohammed bin Salman as a "pariah". 

One Gulf official said there is a real sense of grievance that the US did not help Saudi Arabia during the low oil price spaces, but is demanding its help now that it wants to prevent prices from rising ahead of next month's US mid-term elections and amid the scramble to strip Russian President Vladimir Putin of hydrocarbon revenues.

The Americans, for their part, explained that they are seeking, with this decision, to try to achieve balance in the markets and prevent oil prices from rising. White House spokesman John Kirby said the US has provided a study showing that there is no market basis for cutting oil production.

Saudi Arabia said the decision to cap oil production was "taken unanimously by OPEC+ countries" to inspect oil market conditions. It said that "the decision was taken within these considerations, as part of efforts to support energy stability and security". He stressed that the decision achieves the interests of both producers and consumers, and promotes financial development and development in the world.

Kori Schake, director of Foreign and Defense Policy Studies at the American Enterprise Institute, said of the US position, "they have once again personalised the problem, which will lead to another humiliating escalation when they need something from Saudi Arabia". She added that "they would have been smarter to point out that Saudi Arabia often rejects US requests to use oil as a political tool, when the Saudi economy is totally dependent on it and has an overriding interest in price stability".

On the US side, Scott Modell managing director of Rapidan Energy Group explained that, however dissatisfied the Saudis are with delays in US arms deliveries or assistance due to the war in Ukraine, "they have to grin and bear it" because there is no substitute for the US when it comes to defence and security, he said. For now, the Biden administration is only talking about punishing Saudi Arabia rather than facilitating a rapprochement.

So far, the US plan to intervene in oil production has a name: NOPEC. Within its legislation is a possibility that would allow the US to sue OPEC producers for manipulating the energy market. The Biden administration already plans to sell at least 165 million barrels of crude oil by November from US stockpiles to combat rising prices. Biden could order more oil releases and try to further reduce oil prices.

By contrast, the Saudi military is 75% composed of US equipment, including high-end systems such as fighter jets, said Bruce Riedel, a senior fellow at the Brookings Institution and director of the Brookings Intelligence Project. That equipment relies on US contractor support and spare parts, offering an obvious leverage point for Washington, which we will see how far it is able to influence future OPEC+ decisions.

Americas Coordinator: José Antonio Sierra.