Saudi Arabia stays the course on oil production as US gas prices rise | Economic news


DUBAI, United Arab Emirates (AP) — Saudi Arabia is signaling it is unwilling to pump more oil and will not push to change a deal with Russia and other producers that have limited oil production levels.

That worries Washington as gasoline prices rise and tensions with Russia over Ukraine fuel market uncertainty.

The Biden administration dispatched Brett McGurk, the National Security Council’s Middle East coordinator, and State Department energy envoy Amos Hochstein to Riyadh on Wednesday to discuss a range of issues. , the main one being the ongoing war in Yemen and global energy supply.

Asked by reporters in Washington whether U.S. officials were also urging Saudi Arabia to pump in more crude to mitigate high oil prices, White House press secretary Jen Psaki said she doesn’t. had no more details about the meeting.

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A White House official said the two US officials did not ask the Saudis to increase oil production during their meetings in Riyadh. The person insisted on anonymity.

On Thursday, Emily Horne, spokeswoman for the White House National Security Council, said officials had discussed a “collaborative approach” with the Saudis to manage potential market pressures stemming from a possible Russian invasion of Ukraine.

Two Saudi officials told The Associated Press that the Saudi energy minister has informed the Organization of the Petroleum Exporting Countries, or OPEC, of ​​the kingdom’s commitment to the group’s current roadmap of monthly increases. cautious. They spoke anonymously because they weren’t allowed to brief reporters.

King Salman also said so during a call last week with President Joe Biden. According to a Saudi reading of the appeal, the king stressed “the importance of maintaining the agreement” that is in place between OPEC, the Saudi-led oil cartel, and Russia.

The Saudi-Russian-led alliance known as OPEC+ is calling for a gradual increase in oil production as the world continues to emerge from the pandemic, but geopolitical events are rapidly changing and dragging market volatility.

Rising pump prices pose a threat to Democrats in the upcoming midterm elections. Biden has warned that gas prices could rise even further if Russian President Vladimir Putin invades Ukraine.

Benchmark crude is trading at around $95 a barrel, its highest level in eight years. AAA says the current US national average for a gallon of regular gas is about $3.50, up 40% from its average of $2.50 this time last year.

At a CNN forum in October, Biden said prices were rising because of “OPEC’s withheld supply.” He said that although there are a lot of negotiations going on over the cost of gas, “there are a lot of people from the Middle East who want to talk to me.”

“I’m not sure I can talk to them. But the point is that it is about gas production,” he added.

His remarks were widely interpreted as a swipe at Saudi Crown Prince Mohammed bin Salman, who oversees major policy decisions and day-to-day affairs in the kingdom.

Saudi Arabia has the capacity to produce some 12 million barrels per day, but its production is around 10 million barrels per day, in line with OPEC+ restrictions taken during the coronavirus pandemic.

The Biden administration has emphasized U.S. strategic interests with Saudi Arabia, a break from the Trump administration’s personal relationship with the crown prince that was cultivated by adviser Jared Kushner.

Early in his presidency, Biden rescinded a terrorism designation of Yemen’s Houthi rebels that a Saudi-led coalition is fighting – a move he is now being pressured to reconsider. He also declassified an intelligence report concluding that Prince Mohammed likely approved the operation that killed Saudi writer Jamal Khashoggi at the Saudi consulate in Istanbul in 2018.

Throughout his presidency, Biden has avoided speaking directly with the crown prince, opting instead to hold calls with King Salman, the prince’s 86-year-old father.

The OPEC+ group has consistently pushed back against Biden’s push to pump out significantly more oil, deciding instead to stick to cautious monthly increases. Rising oil prices are a boon to the economies of Saudi Arabia and Russia as Moscow faces possible Western sanctions against Ukraine.

The Wall Street Journal reported that at an energy forum in Riyadh on Wednesday, Saudi Energy Minister Prince Abdulaziz bin Salman rejected calls to pump more oil and said renegotiation of quotas between OPEC members risked further fueling the volatility of the oil markets. The Intercept first reported that Saudi Arabia rejected a plea by Biden to increase oil production.

At the energy forum in Riyadh, Hochstein, the State Department’s energy envoy, stressed that “energy security cannot be taken for granted.”

“We have seen a rapid increase in prices and now have a significant amount of risk, geopolitical risk, factored into our markets,” he told a live symposium from the International Finance Forum. ‘energy. High oil prices and high inflation are cyclical and influence each other, he added.

Oil producers, he said, must “make sure supply is there to meet demand” so prices don’t continue to weigh on the U.S. economy and a broader economic recovery. .

Speaking at the same energy forum, the head of the International Energy Agency called on OPEC+ producers to close what he said was a 1 million barrel per day gap between their stated goals and actual output. The IEA says Saudi Arabia and the United Arab Emirates could help stabilize prices if they pumped in more oil.

IEA Executive Director Fatih Birol called on OPEC+ producers to “supply more volume to markets” to reduce price volatility weighing on households.

Al-Shihri reported from Riyadh, Saudi Arabia. Associated Press writer Joshua Boak in Washington contributed to this report.

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