The OPEC+ decision to dramatically cut its oil output targets has left the White House grappling with a complex – and potentially damaging – mix of geopolitical and domestic challenges with few easy answers.
President Joe Biden now faces the reality that an already complex and tenuous bilateral relationship with Saudi Arabia has deeply fractured, the Western effort to isolate and shrink Russia’s war effort has taken a direct hit and the US economy and political picture have both grown more fragile.
“Disappointment. We’re looking at what alternatives we may have” to bring down oil prices, Biden told reporters when asked his reaction to the OPEC+ news.
“There’s a lot of alternatives. We haven’t made up our mind yet,” he added.
Biden’s advisers are now re-doubling efforts to find policy and diplomatic options to address the unwelcome surprise.
“We’re going to work to identify the tools that we have to ensure that organizations like OPEC that assign quotas to their members of how much to produce are not – have a muted and less of an impact on American consumers, and quite frankly, on the global economy,” Amos Hochstein, Biden’s top energy envoy, told Bianna Golodryga on CNN’s “New Day” Thursday.
The full scale of the fallout from Saudi Arabia-led oil cartel’s decision may not be apparent for months or longer, officials say. But they are also keenly aware just how many acutely important elements of the administration’s foreign and domestic agenda the production cut spills directly into.
Biden administration officials acknowledge they’re in a very difficult position over their relationship with Saudi Arabia.
There is clearly a tacit effort underway to evaluate options to respond to the OPEC+ decision to cut back oil production by 2 million barrels per day. But as has been laid bare repeatedly over the course of Biden’s time in office, the power dynamics between the US and the Kingdom of Saudi Arabia are simply in a different place now than at any earlier point due to the economic and energy pressures tied to Russia’s invasion.
Crown Prince Mohammed bin Salman has made abundantly clear he feels no need to be the junior actor, and his overt and explicit moves toward China and Russia have ensured there is no subtlety in his approach.
On a purely oil market basis, the Saudis prize stability over anything else – stability the OPEC+ configuration has provided after damaging price wars and the volatility of the pandemic. Moscow, of course, is the key player in that configuration and it’s notable that beneath the output cut, an extension of the OPEC+ arrangement was also approved on Wednesday.
Still, while administration officials always viewed Biden’s trip to Jeddah – which resulted in the diplomatic fist bump seen around the world – as a critical regional security move, the cartel’s willingness to move in ways so obviously detrimental to US interests has reverberated across the administration. Biden again defended the trip Thursday, saying, “The trip was not essentially for oil. The trip was about the Middle East and about Israel and rationalization of positions.”
“It’s not always about us, we get it,” one US official said. “But they’re just as aware of the perceptions and implications of this move as we are.”
The most obvious lever for the US to pull is security related – it’s far and away the biggest leverage point. But the ramifications of any moves on that front are much broader than the bilateral relationship, officials note, and would directly undercut more than a year of intensive work to establish a coherent regional security posture.
White House press secretary Karine Jean-Pierre’s statement on Wednesday that it “is clear OPEC+ is aligning with Russia” and its war effort was as intentional as it was blunt. Hochstein, in his CNN interview, reiterated that the OPEC+ decision was a “huge mistake” and “the wrong thing to do” amid Russia’s ongoing war in Ukraine and high energy prices, saying that Russia and Saudi Arabia are “working together.”
US officials had previously been cautious about directly criticizing the obvious dance Saudi Arabia and others in the region have conducted with Moscow. That posture is gone.
Biden administration officials, according to people with knowledge, made very clear to the Saudis in the days leading up the move that US rhetoric would change dramatically and they would open the door to new options to respond to a major cut. The specifics of those options were left somewhat ambiguous intentionally. But the warning was there.
Congressional role
One notable line in the White House statement issued Wednesday by National Economic Council Director Brian Deese and national security adviser Jake Sullivan statement was the idea of working with Congress on legislation related to OPEC.
It’s a reference to a bill that would remove sovereign immunity from antitrust suits, opening the door for the US to sue cartel members. The White House has been cool to the idea due to the very real concern it would launch a price war with the market’s biggest players that would only serve to hurt US consumers. But just cracking the door open to looking at it is notable – and underscores the scale of the anger inside the West Wing.
The legislative reference underscores a key piece how the response will play out in the weeks ahead – the White House has made its statement, which – in a world of cautious diplo-speak – was sharply critical. Now officials have said they are perfectly comfortable letting congressional Democrats rail on the Saudis on their behalf, something they expect to only escalate in the days ahead given the convergence of geopolitical and domestic political factors.
The blistering response from Capitol Hill has the potential to create some the kind of pressure that could create space to pursue actions the administration has been wary of pursuing up to this point.
Connecticut Democratic Sen. Chris Murphy, for instance, tweeted, “I thought the whole point of selling arms to the Gulf States despite their human rights abuses, nonsensical Yemen War, working against US interests in Libya, Sudan, etc, was that when an international crisis came, the Gulf could choose America over Russia/China.”
Domestic production
The biggest focus for the White House now on oil is on the domestic front. Biden’s top energy and economic advisers met privately with oil executives last week and discussions between officials and industry players have continued this week. Another meeting is likely soon as they continue to search for options to boost US production.
While several options have been floated – including some that infuriate the industry, like potential curbs on exports – it remains unclear whether the White House is ready to move forward on any of them.
A question being weighed now is if OPEC+’s decision changes that dynamic at all in a relationship between the White House and industry that has ping-ponged between clear animosity to cooler heads prevailing and back toward palpable tension over the course of the last several months.
The White House rhetorical reversal hinting at the potential for new Strategic Petroleum Reserve releases, a complete 180-degree turn in less than 24 hours, was notable even if it didn’t signal anything concrete.
What it did signal, however, was a clear message to markets that the option was, in fact, on the table.
The final release of 10 million from Biden’s announced 180 million barrel release over six months is still scheduled for November, even though the actual total barrels released will fall under the full amount Biden initially targeted. Cracking the door open on additional releases was an effort to signal there is a view inside the White House that there are still metaphorical bullets in the chamber if they need them.
One key point to remember amid the hand-wringing: Predictions of specific price increases at the pump are a fool’s errand.
“I believe it will have less of an impact in the United States and far more of an impact on lower-income countries around the world,” Hochstein said.
The market has been pricing in the output cut for several days. A key element of the output cut is that nearly all OPEC+ members have been missing their production targets for months. So “2 million barrels per day” is actually far less than that from a production basis.
In other words, there are a myriad of factors that drive retail prices – such as in California, where soaring gas prices over the last two weeks were in large part due to a mess of refinery issues – and no single answer to the range of new complications White House officials are now facing.
Biden’s message, behind his disappointment with the production cut, was clear cut, according to Hochstein.
“The President is still instructing us to work, to do whatever we can,” he said.
CNN’s Betsy Klein and Jeremy Diamond contributed to this report.
"oil" - Google News
October 06, 2022 at 09:56PM
https://ift.tt/CtYexHn
White House left looking for answers after OPEC+ announces oil production cuts - CNN
"oil" - Google News
https://ift.tt/9ulSDZt
Shoes Man Tutorial
Pos News Update
Meme Update
Korean Entertainment News
Japan News Update
Bagikan Berita Ini
0 Response to "White House left looking for answers after OPEC+ announces oil production cuts - CNN"
Post a Comment