DUBAI – Saudi Arabia said on Thursday that the United States had urged the kingdom to postpone a decision by OPEC and its allies, including Russia, to cut oil production by a month. Such a delay could have helped reduce the risk of a spike in gasoline prices ahead of the US midterm elections next month.
A statement released by the Saudi Foreign Ministry did not specifically mention the November 8 election in which US President Joe Biden is trying to maintain his narrow Democratic majority in Congress. However, he claimed that the United States “suggested” that the cuts be delayed by a month. In the end, OPEC announced the cuts at its October 5 meeting in Vienna.
Postponing the cuts would have meant implementing them just before the Nov. 8 election, at a time when they likely wouldn’t be able to dramatically influence gas station prices.
Rising oil prices, and by extension rising gasoline prices, have been a key driver of inflation in the US and around the world, worsening global economic woes, as Russia’s months-long war against Ukraine has also disrupted the world’s food supply. For Biden, the gradual increase in gasoline prices could affect voters. He and many lawmakers have warned that the United States’ longstanding security-based relationship with the kingdom could be reconsidered.
The White House has rejected any attempt to link OPEC’s request to the election, but Saudi Arabia has issued a rare and lengthy statement showing how strained relations are between the two countries. Ties have been strained since 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 has been arming and supporting Ukraine.
The Saudi Foreign Ministry statement acknowledged that the kingdom had been in talks with the US about postponing OPEC+’s 2 million-barrel cut announced last week.
“The kingdom’s government clarified through its ongoing consultation with the US administration that all economic analyzes indicate that postponing the OPEC+ decision for one month, as suggested, would have had negative economic consequences,” the ministry said in its statement. . .
The ministry statement confirmed a Wall Street Journal article this week that also said the United States was seeking to delay OPEC+ production cuts until just before the midterm elections. The Journal cited unnamed Saudi officials who described the move as a political ploy by Biden ahead of the vote.
The kingdom also criticized attempts to link the kingdom’s decision to Russia’s war against Ukraine.
“The kingdom emphasizes 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 goals of protecting the global economy from oil market volatility,” said. . “Resolving economic challenges requires establishing a constructive, non-politicized dialogue and considering wisely and rationally what serves the interests of all countries.”
Both Saudi Arabia and neighboring United Arab Emirates, key producers in OPEC, voted in favor of a United Nations General Assembly resolution on Wednesday to condemn Russia’s “illegal annexation attempt” of four Ukrainian regions and demand their immediate revocation.
Once strong enough to stop the US with its 1970s oil embargo, OPEC needed non-members like Russia to push through a production cut in 2016 after prices fell below $30 a barrel. barrel amid rising US production. The 2016 agreement gave rise to the so-called OPEC+, which joined the cartel to cut production to help stimulate prices.
The coronavirus pandemic sent oil prices briefly into negative territory before air travel and economic activity rebounded after lockdowns around the world. Benchmark Brent crude rose above $92 a barrel early on Wednesday, but oil-producing nations are concerned prices could fall sharply amid efforts to fight inflation.
Biden, who called Saudi Arabia a “pariah” during his 2020 election campaign, traveled to the kingdom in July and bumped fists with Prince Mohammed before a meeting. Despite the scope, the kingdom has supported keeping oil prices high to finance Prince Mohammed’s aspirations, including his futuristic $500 billion desert city project called Neom.
On Tuesday, Biden warned of repercussions for Saudi Arabia from the OPEC+ decision.
“There will be some consequences for what they have done with Russia,” Biden said. “I am not going to go into what I would consider and what I have in mind. But there will be… there will be consequences.”