OPEC+ oil production cuts show spat between Biden and Saudi royals

WASHINGTON/LONDON, Oct 8 (Reuters) – OPEC+’s decision this week to cut oil production despite strong U.S. opposition further strained already tense relations between the White House of President Joe Biden and the royal family of Saudi Arabia, one of Washington’s staunchest Middle East allies. , according to interviews with about a dozen government officials and experts in Washington and the Gulf.

The sources said the White House had pressed hard to block OPEC production cuts. Biden is hoping to keep U.S. gasoline prices from rising again ahead of midterm elections in which his Democrats are fighting to retain control of the U.S. Congress. Washington wants to cut Russia’s energy revenues during the Ukraine war.

The US administration has been lobbying OPEC+ for weeks. In recent days, senior U.S. officials from the energy, foreign policy and economic groups urged their foreign counterparts to vote against the production cuts, according to two sources familiar with the discussions.

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Amos Hochstein, Biden’s top energy envoy, national security official Brett McCurk and the administration’s special envoy to Yemen Tim Lenderking visited Saudi Arabia last month to discuss energy issues, including the OPEC+ decision.

They failed to prevent output cuts, as Biden did after his own July visit.

U.S. officials tried to position “Russia against us,” one source explained of the discussions, telling Saudi officials they had to make a choice.

That argument failed, and the source said the Saudis told the U.S. that if it wanted more oil on the market, it should start producing its own.

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According to data from the US Energy Information Administration, the US is the world’s No. 1 producer of oil and its top consumer.

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

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

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

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

The U.S. push for a price cap on Russian oil is causing uncertainty, Energy Minister Prince Abdulaziz bin Salman told Bloomberg TV after the OPEC cuts, citing a “lack of detail and ambiguity” about how it would be implemented.

A source described by Saudi officials said the kingdom envisions “a non-market price-control mechanism that could be used by a group of consumers against producers.”

Biden-led sales of 180 million barrels of oil in March put downward pressure on U.S. strategic petroleum reserve oil prices. OPEC+ said in March it would stop using data from the International Energy Agency (IEA), a Western oil watchdog, over Saudi-led concerns that the United States has too much influence.

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On Thursday, Biden called the Saudi decision “a disappointment” and said Washington could take further action in the oil market.

“OPEC Plus is clearly colluding with Russia,” White House spokeswoman Karine Jean-Pierre said Wednesday. He did not elaborate on how the production cuts would affect US-Saudi relations. In the US Congress, Biden’s Democrats have talked about withdrawing US troops from Saudi Arabia and withdrawing weapons.

“The whole point of selling weapons to the Gulf states despite the human rights abuses of the Gulf states, the stupid war in Yemen, working against US interests in countries like Libya, Sudan, etc., I thought that when an international crisis came, the Gulf states would choose the US over Russia/China,” the Democrat said. Senator Chris Murphy said on Twitter.

Saudi Foreign Minister Adel al-Jubeir told Fox News on Friday that “Saudi Arabia does not politicize oil or oil decisions” when asked about the US criticism.

“With all due respect, the reason you have high prices in the U.S. is because you have a refining deficit that’s been there for over 20 years,” he added.

Crown Prince and Biden

Weeks after Biden took office, Washington issued a statement linking the 2018 killing of journalist Jamal Khashoggi to Crown Prince Mohammed bin Salman.

King Salman’s son Prince, 86, has denied ordering the killing but admitted it took place “on my watch”.

His lawyers argued in a US court that the prince was sworn in as prime minister last month, which exempts him from prosecution over Khashoggi’s death.

Biden’s trip to Jeddah, Saudi Arabia, in July for a Gulf summit was aimed at improving ties, but he also leveled harsh criticism at bin Salman over Khashoggi’s murder.

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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 revenue to protect their country from recession.

“Macroeconomic risk is getting worse all the time, so they have to respond,” Cahill said. “They know a cut would irritate Washington, but they manage the market.”

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Reporting by Steve Holland, Timothy Gardner and Jared Renshaw in Washington; Dmitry Zhdannikov in London, Aziz El Yaakoubi in Riyadh, Ghaida Gantous in Dubai and Ahmed Tolba in Cairo. Editing by Heather Timmons, David Gregorio and Jane Merriman

Our Standards: Thomson Reuters Trust Principles.

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