Saudi Arabia says US sought a month delay of OPEC+ decision

Saudi Arabia says US sought a month delay of OPEC+ decision

DUBAI — Saudi Arabia stated Thursday that the U.S. had urged Saudi Arabia to postpone a decision of OPEC and its allies, including Russia, to reduce oil production by a month. This delay could have helped to reduce the risk that gas prices would spike ahead of the U.S. midterm election next month.

The statement by the Saudi Foreign Ministry did not mention the Nov.8 elections in which U.S. President Joe Biden tries to keep his narrow Democratic majority in Congress. It stated that the U.S. suggested that the cuts be delayed for a month. OPEC finally announced the cuts at its Oct. 5, Vienna meeting.

Staying off on cuts would have meant that they were implemented just before the Nov.8 election, when they wouldn’t have a significant impact on pump prices.

Rising oil prices and, by extension, higher gasoline prices have been a key driver for inflation in the U.S.A. and around the globe. This would have meant that cuts were implemented just before the Nov. 8 election — at a time when they likely couldn’t significantly affect prices at the pump. Rising gasoline prices could have a negative impact on voters, according to Biden. Many lawmakers and he have warned that America’s long-standing security-based relationship to the kingdom may need to be reexamined.

The White House has refused to link the OPEC request with the elections. Saudi Arabia issued a rare, long statement that demonstrates how tense the relations between the two countries. Since the 2018 murder and dismemberment by the Washington Post columnist Jamal Khashoggi (which Washington believes was on orders of Saudi Crown Prince Mohammed bin Salman), ties have been strained. Higher energy prices are a weapon Russia has to use against the West, which has been supporting and arming Ukraine. The statement from the Saudi Foreign Ministry stated that the kingdom had been in discussions with the U.S. regarding postponing OPEC ’s 2 million barrel reduction announced last week.

“The kingdom’s government clarified with the U.S. administration through continuous consultation that all economic analyses show that delaying the OPEC decision by a month, as suggested, would have negative economic consequences,” the ministry stated in its statement.

The statement by the ministry confirmed a Wall Street Journal article that said the U.S. wanted to delay the OPEC production cuts until after the midterm elections. The Journal quoted unnamed Saudi officials who described the move as a political ploy by Biden in advance of the vote.

The kingdom also criticised attempts to link the kingdom’s decision to Russia’s war against Ukraine. The kingdom stated that it tries to maintain strong relations with all friendly nations, but it also rejects any actions or dictates that would undermine its noble objectives to protect the world’s economy from volatility. “Resolving economic challenges requires the establishment of a non-politicized constructive dialogue, and to wisely and rationally consider what serves the interests of all countries.”

Both Saudi Arabia and the neighboring United Arab Emirates, key producers in OPEC, voted in favor of a United Nations General Assembly resolution Wednesday to condemn Russia’s “attempted illegal annexation” of four Ukrainian regions and demand its immediate reversal.

Once muscular enough to grind the U.S. to a halt with its 1970s oil embargo, OPEC needed non-members like Russia to push through a production cut in 2016 after prices crashed below $30 a barrel amid rising American production. The 2016 agreement was the birth of OPEC . This cartel joined in cutting production to stimulate prices. The coronavirus pandemic caused oil prices to briefly fall before air travel, but economic activity rebounded after lockdowns around world. The benchmark Brent crude oil was hovering at $92 per barrel on Wednesday morning, but oil-producing countries are concerned that prices could fall sharply amid efforts to curb inflation.

Biden famously called Saudi Arabia “pariah” during his 2020 campaign. He visited the kingdom in July and fist bumped Prince Mohammed before a meeting. Despite the outreach, the kingdom has supported keeping oil prices high to fund Prince Mohammed’s aspirations. This includes his $500 billion futuristic desert-city project called Neom.

Biden warned Tuesday of the repercussions that the OPEC decision could have on Saudi Arabia.

” There will be consequences for what they have done with Russia,” Biden stated. “I don’t want to get into what my thoughts are and what I have in my mind. But there will be — there will be consequences.”

——

Follow Jon Gambrell on Twitter at www.twitter.com/jongambrellAP.

Read More