Dubai, United Arab Emirates – Saudi Arabia said on Thursday that the US had urged the kingdom to delay a decision by OPEC and its allies – including Russia – to cut oil production by a month, which would have been just before the upcoming US mid-term elections.
A statement issued by the Saudi foreign ministry did not specifically mention the election, which is crucial for US President Joe Biden to retain his Democratic Party’s slim majority in Congress. However, it said the US had “suggested” that the cuts be delayed by a month instead of being implemented at the October 5 OPEC meeting in Vienna.
A one-month delay would have put them right before the Nov. 8 election — where they likely wouldn’t be able to dramatically affect pump prices.
Rising oil prices – and generally higher gasoline prices – have been a key driver of inflation in the US and around the world, exacerbating global economic woes as Russia’s months-long war against Ukraine has also disrupted global food supplies. For Biden, the creeping rise in gas prices could affect voters. He and many lawmakers have warned that America’s longstanding security-based relationship with the kingdom could be up for review.
The White House rejected attempts to link OPEC’s demand to the election, but Saudi Arabia released a rare, lengthy statement that showed how strained relations between the two countries are. This is even years after the 2018 killing and dismemberment of Washington Post columnist Jamal Khashoggi, which Washington believes was carried out on the orders of Saudi Crown Prince Mohammed bin Salman. Meanwhile, higher energy prices provide a weapon Russia can use against the West, which is arming and supporting Ukraine.
The Saudi Foreign Ministry statement acknowledged that the kingdom had been in talks with the US to delay the 2 million barrel OPEC+ cut announced last week.
“The Kingdom’s government has made clear through its ongoing consultations with the US administration that all economic analyzes show that delaying the OPEC+ decision by one month, as proposed, would have negative economic consequences,” the statement said. the ministry.
The ministry’s statement confirmed a Wall Street Journal article this week that also said the US was seeking to delay OPEC+ production cuts until just before the midterm elections. The newspaper quoted unnamed Saudi officials as describing the move as a political gambit by Biden ahead of the vote.
The kingdom also criticized attempts to link the kingdom’s decision to Russia’s war on Ukraine.
“The Kingdom emphasizes that while it seeks to maintain the strength of its relations with all friendly countries, it reaffirms its rejection of any dictates, actions or efforts to distort its noble objectives of protecting the global economy from the volatility of the oil market,” it said the message. . “Resolving economic challenges requires the establishment of a non-politicized constructive dialogue and a reasonable and rational consideration of what serves the interests of all parties.”
Both Saudi Arabia and neighboring United Arab Emirates, key OPEC producers, voted in favor of a UN General Assembly resolution on Wednesday to condemn Russia’s “attempted illegal annexation” of four Ukrainian regions and demand its immediate reversal.
Once muscular enough to stop the US with its 1970s oil embargo, OPEC needed non-members like Russia to push through production cuts in 2016 after prices fell below $30 a barrel on against the backdrop of growing US manufacturing. The 2016 accord gave birth to the so-called OPEC+, which joined the cartel in cutting production to help prop up prices.
The coronavirus pandemic briefly saw oil prices slip into negative territory before air travel and economic activity rebounded from lockdowns around the world. Benchmark Brent crude oil rose above $92 a barrel early on Wednesday, but concerns that inflation and efforts to fight it could lead to a recession have oil-producing countries worried that prices could fall sharply.
Biden, who called Saudi Arabia a “pariah” during his campaign, traveled to the kingdom in July and punched Prince Mohammed before a meeting. Despite the scope, the kingdom supports keeping oil prices high to fund Prince Mohammed’s ambitions, including his planned $500 billion futuristic desert city project called Neom.
On Tuesday, Biden warned of the implications for Saudi Arabia of the OPEC+ decision.
“There are going to be some consequences for what they did with Russia,” Biden said. “I’m not going to go into what I would consider and what I mean. But there will be – there will be consequences.”
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Follow Jon Gambrell on Twitter at www.twitter.com/jongambrellAP.