The OPEC + oil production cut shows the widening rift between Biden and the Saudi royal family

WASHINGTON/LONDON (Reuters) – This week’s decision by OPEC+ to cut oil production despite fierce U.S. opposition has further strained already strained relations between President Joe Biden’s White House and the Saudi royal family, once one of Washington’s strongest allies in the world. The Middle East. According to interviews with about a dozen government officials and experts in Washington and the Gulf.

These sources said that the White House lobbied hard to prevent the OPEC production cut. Biden hopes to keep US gasoline prices from rising again ahead of the midterm elections in which his Democratic Party is struggling to maintain control of the US Congress. Washington also wants to limit Russian energy revenues during the Ukraine war.

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

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Amos Hochstein, Biden’s top energy envoy, along with National Security Officer Brett McGurk and the administration’s special envoy to Yemen Tim Lenderking, traveled to Saudi Arabia last month to discuss energy issues, including the OPEC+ decision.

They failed to prevent production cuts, just as Biden did after his July visit.

A source familiar with the discussions said US officials “tried to frame the matter as ‘us against Russia,'” and told Saudi officials they needed to choose.

This argument was unsuccessful, the source said, adding that the Saudis said that if the United States wanted more oil in the markets, it should start producing more of its own oil.

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The United States is the world’s number one oil producer and also its largest consumer, according to US Energy Information Administration data.

The Saudi government media office CIC did not respond to emailed requests to Reuters for comment on the discussions.

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

He said that OPEC weighs its interests “with the interests of the world because we have an interest in supporting the growth of the global economy and providing energy supplies in the best way.”

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

Energy Minister Prince Abdulaziz bin Salman told Bloomberg TV after the OPEC cut that US pressure for a cap on Russian oil prices was raising uncertainty, citing a “lack of detail and lack of clarity” on how it would be implemented.

A source briefed by Saudi officials said the kingdom considers it a “non-market price-control mechanism that a cartel of consumers can use against producers.”

The sale of 180 million barrels of oil under Biden’s direction in March from the US Strategic Petroleum Reserve put downward pressure on oil prices. In March, OPEC+ said it would stop using data from the International Energy Agency (IEA), a Western oil watchdog, due to Saudi-led concerns that the United States would have too much influence.

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On Thursday, Biden called the Saudi decision a “disappointment,” adding that Washington may take other measures in the oil market.

“See, it’s clear that OPEC Plus is allied with Russia,” White House Press Secretary Karen-Jean-Pierre said on Wednesday. It did not explain how the production cut would affect US-Saudi relations. In the US Congress, Democrats in Biden called for the withdrawal of US forces from Saudi Arabia and talked about recovering weapons.

“I thought the whole point of selling arms to Gulf countries despite their human rights violations, Yemen’s illogical war, working against American interests in Libya and Sudan, etc., is that when an international crisis comes, the Gulf can choose America over Russia/China,” he said. Senator Chris Murphy, a Democrat, on Twitter.

“Saudi Arabia does not politicize oil or oil decisions,” Saudi Minister of State for Foreign Affairs Adel al-Jubeir told Fox News on Friday in response to a question about US criticism.

“With due respect, the reason prices are so high in the US is that you’ve had a refining shortage that’s been around for more than 20 years,” he added.

The Crown Prince and Biden

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

Prince Salman, 86-year-old son of King Salman, denied ordering the killing but acknowledged that it was “under my tutelage”.

The prince became prime minister last month, and his lawyers have been arguing in a US court that this makes him immune from prosecution in the Khashoggi murder.

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Biden’s trip to Jeddah, Saudi Arabia, in July for a Gulf summit was aimed at mending ties, but he also drew heavy criticism of bin Salman over the Khashoggi killing.

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

“The macroeconomic risks are getting worse all the time, so they have to respond,” Cahill said. They know the cuts will irritate Washington, but they are managing the market.”

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(Reporting by Steve Holland, Timothy Gardner and Garrett Renshaw in Washington; Dmitriy Zhdanikov in London, Aziz Al-Yaqoubi in Riyadh, Ghaida Ghantous in Dubai and Ahmed Tolba in Cairo. Editing by Heather Timmons, David Gregorio and Jane Merriman

Our criteria: Thomson Reuters Trust Principles.

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