Dubai: Saudi Arabia said Thursday that the US had urged the kingdom to postpone a decision by OPEC and its allies — including Russia — to cut oil production by a month which would have been just before the upcoming American midterm elections.
A statement issued by the Saudi Foreign Ministry didn’t specifically mention the elections, crucial to US President Joe Biden maintaining his Democratic Party’s narrow majorities in Congress.
However, it stated that the US “suggested” the cuts be delayed by a month as opposed to being implemented at OPEC’s October 5 meeting in Vienna.
A month delay would have put them just before the November 8 elections — where they likely couldn’t have drastically influenced prices at the pump.
Rising oil prices — and by extension higher gasoline prices — have been a key driver of inflation in the US and around the world, worsening global economic woes as Russia’s monthslong war on Ukraine also has disrupted global food supplies.
For Biden, gasoline prices creeping up could affect voters. He and many lawmakers have warned that America’s longtime security-based relationship with the kingdom could be reconsidered.
The White House has rejected an attempts to link the OPEC request to the elections, but Saudi Arabia issuing a rare, lengthy statement shows just how tense relations are between the two countries.
That’s even years after the 2018 killing and dismemberment of Washington Post columnist Jamal Khashoggi, which Washington believes came on the orders of Saudi Crown Prince Mohammed bin Salman.
Meanwhile, higher energy prices provide a weapon Russia can use against the West, which has been arming and supporting Ukraine.
The statement by the Saudi Foreign Ministry acknowledged that the kingdom had been talking to the US about postponing OPEC+’s 2 million barrel cut announced last week.
“The government of the kingdom clarified through its continuous consultation with the US administration that all economic analyses indicate that postponing the OPEC+ decision for a month, according to what has been suggested, would have had negative economic consequences,” the ministry said in its statement.
The ministry’s statement confirmed a Wall Street Journal article this week that also said the US sought to delay the OPEC+ production cut until just before the midterm elections.
The Journal quoted unnamed Saudi officials as describing the move as a political gambit by Biden ahead of the vote.
The kingdom also criticised attempts to link the kingdom’s decision to Russia’s war on Ukraine.
“The kingdom stresses that while it strives to preserve the strength of its relations with all friendly countries, it affirms its rejection of any dictates, actions, or efforts to distort its noble objectives to protect the global economy from oil market volatility,” it said.
“Resolving economic challenges requires the establishment of a non-politicised constructive dialogue, and to wisely and rationally consider what serves the interests of all countries.”
Both Saudi Arabia and the neighbouring United Arab Emirates, key producers in OPEC, voted in favour 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 US 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 USD 30 a barrel amid rising American production. The 2016 agreement gave birth to the so-called OPEC+, which joined the cartel in cutting production to help stimulate prices.
The coronavirus pandemic briefly saw oil prices go into negative territory before air travel and economic activity rebounded following lockdowns around the world.
Benchmark Brent crude sat over USD 92 a barrel early Wednesday, but worries inflation and efforts to combat it could lead to a recession have oil-producing nations worried prices could sharply fall.
Biden, who famously called Saudi Arabia a “pariah” during his election campaign, travelled to the kingdom in July and fist-bumped Prince Mohammed before a meeting.
Despite the outreach, the kingdom has been supportive of keeping oil prices high in order to fund Prince Mohammed’s aspirations, including his planned USD 500 billion futuristic desert city project called Neom.
On Tuesday, Biden warned of repercussions for Saudi Arabia over the OPEC+ decision.
“There’s going to be some consequences for what they’ve done, with Russia,” Biden said. “I’m not going to get into what I’d consider and what I have in mind. But there will be — there will be consequences.”
AP
