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| Photo Credit: AP. |
DUBAI, United Arab Emirates (AP) — Saudi Arabia said Thursday that the U.S. 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 gas prices ahead of the U.S. midterm elections next month.
A statement
issued by the Saudi Foreign Ministry didn’t specifically mention the Nov. 8
elections in which U.S. President Joe Biden is trying to maintain his narrow
Democratic majority in Congress. However, it stated that the U.S. “suggested”
the cuts be delayed by a month. In the end, OPEC announced the cuts at its Oct.
5 meeting in Vienna.
Holding off
on cuts would have meant implementing them just before the Nov. 8 election — at
a time when they likely couldn’t drastically influence prices at the pump.
Rising oil
prices — and by extension higher gasoline prices — have been a key driver of
inflation in the U.S. and around the world, worsening global economic woes as
Russia’s months-long war on Ukraine also has disrupted global food supplies.
For Biden, gasoline prices creeping up could affect voters. He and many
lawmakers have warned that America’s longtime security-based relationship with
the kingdom could be reconsidered.
The White
House has rejected any attempts to link the OPEC request to the elections, but
Saudi Arabia issuing a rare, lengthy statement shows just how tense relations
are between the two countries. Ties have been fraught since the 2018 killing
and dismemberment of Washington Post columnist Jamal Khashoggi, which
Washington believes came 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
statement by the Saudi Foreign Ministry acknowledged that the kingdom had been
talking to the U.S. about postponing OPEC+’s 2 million barrel cut announced
last week.
“The
government of the kingdom clarified through its continuous consultation with
the U.S. administration that all economic analyses indicate that postponing the
OPEC+ decision for a month, according to what has been suggested, would have
had negative economic consequences,” the ministry said in its statement.
The
ministry’s statement confirmed a Wall Street Journal article this week that
also said the U.S. sought to delay the OPEC+ production cut until just before
the midterm elections. The Journal 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 stresses 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
objectives to protect the global economy from oil market volatility,” it said.
“Resolving economic challenges requires the establishment of a non-politicized
constructive dialogue, and to wisely and rationally consider what serves the
interests of all countries.”
Both Saudi
Arabia and the neighboring United Arab Emirates, key producers in OPEC, voted
in favor of a United Nations General Assembly resolution Wednesday to condemn
Russia’s “attempted illegal annexation” of four Ukrainian regions and demand its
immediate reversal.
Once
muscular enough to grind the U.S. to a halt with its 1970s oil embargo, OPEC
needed non-members like Russia to push through a production cut in 2016 after
prices crashed below $30 a barrel amid rising American production. The 2016
agreement gave birth to the so-called OPEC+, which joined the cartel in cutting
production to help stimulate prices.
The
coronavirus pandemic briefly saw oil prices go into negative territory before
air travel and economic activity rebounded following lockdowns around the
world. Benchmark Brent crude sat over $92 a barrel early Wednesday, but
oil-producing nations are worried prices could sharply fall amid efforts to
combat inflation.
Biden, who
famously called Saudi Arabia a “pariah” during his 2020 election campaign,
traveled to the kingdom in July and fist-bumped Prince Mohammed before a
meeting. Despite the outreach, the kingdom has been supportive of keeping oil
prices high in order to fund Prince Mohammed’s aspirations, including his
planned $500 billion futuristic desert city project called Neom.
On Tuesday,
Biden warned of repercussions for Saudi Arabia over the OPEC+ decision.
“There’s
going to be some consequences for what they’ve done, with Russia,” Biden said.
“I’m not going to get into what I’d consider and what I have in mind. But there
will be — there will be consequences.”
Follow Jon
Gambrell on Twitter at www.twitter.com/jongambrellAP