OPEC+ oil production drop shows growing rift between Biden and Saudi royal family

WASHINGTON/LONDON, Oct 8 (Reuters) – The decision by the OPEC+ organization this week to cut oil production despite strong U.S. opposition has further strained already strained relations between President Joe Biden’s White House and the royal family. Saudi Arabia, once one of Washington’s staunchest allies in the Middle East. , according to interviews with a dozen government officials and experts in Washington and the Gulf.

The White House lobbied to prevent OPEC’s production cut, the sources said. Biden hopes to keep U.S. gasoline prices from rising again ahead of the midterm elections in which his Democratic Party struggles to maintain control of the U.S. Congress. Washington also wants to limit Russia’s energy revenues during the war in Ukraine.

The US administration has lobbied OPEC+ for weeks. In recent days, senior U.S. officials from the energy, foreign policy and economics teams have urged their foreign counterparts to vote against a production cut, according to two sources familiar with the talks.

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Amos Hochstein, Biden’s top energy envoy, along with national security official Brett McGurk and the administration’s special envoy to Yemen Tim Lenderking, visited Saudi Arabia last month to discuss energy issues, including including the OPEC+ decision.

They failed to prevent a production cut, much like Biden did after his own visit in July.

US officials “tried to position it as ‘us versus Russia,'” a source familiar with the talks said, telling Saudi officials they had to make a choice.

That argument failed, the source said, adding that the Saudis had said that if the United States wanted more oil in the markets, it should start producing more of it.

The United States is the world’s largest oil producer and also its largest consumer, according to data from the US Energy Information Administration.

The Saudi government media office CIC did not respond to Reuters emailed requests for comment on the talks.

“We care first and foremost about the interests of the Kingdom of Saudi Arabia, then the interests of the countries that have trusted us and are members of OPEC and the OPEC+ alliance,” the minister said on Wednesday. of Energy, Prince Abdulaziz, on Saudi television.

OPEC weighs its interests against “those of the world because we have an interest in supporting the growth of the world economy and ensuring the best possible energy supply”, he said.

Washington’s handling of the Iran nuclear deal and withdrawal of support for offensive military operations by a Saudi-led coalition in Yemen have upset Saudi officials, as have actions against Russia after the invasion of Ukraine in February 2022.

US push for a Russian oil price cap is causing uncertainty, Energy Minister Prince Abdulaziz bin Salman told Bloomberg TV after the OPEC cut, noting the “lack of detail and lack of clarity” on how it will be implemented.

A source briefed by Saudi officials said the kingdom sees it as “an off-market price control mechanism, which could be used by a consumer cartel against producers.”

A Biden-led sale of 180 million barrels of oil in March from the U.S. Strategic Petroleum Reserve put downward pressure on oil prices. In March, OPEC+ announced it would stop using data from the International Energy Agency (IEA), a Western oil watchdog, over Saudi concerns that the United States had too much of influence.

On Thursday, Biden called the Saudi move “a disappointment,” adding that Washington could take further action in the oil market.

“Listen, it’s clear that OPEC Plus is aligned with Russia,” White House press secretary Karine Jean-Pierre said Wednesday. She did not specify how the production cut would affect US-Saudi relations. In the US Congress, Biden’s Democrats called for the withdrawal of US troops from Saudi Arabia and talked about taking up arms again.

“I thought the point of selling arms to the Gulf States despite their human rights abuses, their senseless war in Yemen, their work against US interests in Libya, Sudan, etc., was only when an international crisis arose, the Gulf could choose America over Russia/China,” Sen. Chris Murphy, a Democrat, tweeted.

Saudi Minister of State for Foreign Affairs Adel Al-Jubeir told Fox News on Friday when asked about US criticism: “Saudi Arabia does not politicize oil or oil decisions.”

“With all due respect, the reason you have high prices in the United States is because you have a refining shortage that has existed for over 20 years,” he added. .

CROWN PRINCE AND BIDEN

Weeks after Biden took office as president, Washington released a report linking the 2018 murder of journalist Jamal Khashoggi to Crown Prince Mohammed bin Salman.

The prince, son of King Salman, 86, denied ordering the killing but admitted it had taken place “under my watch”.

The prince became prime minister last month and his lawyers have argued in a US court that this shields him from prosecution in Khashoggi’s death.

Biden’s trip to Jeddah, Saudi Arabia, in July for a Gulf summit was aimed at repairing relations, but he also harshly criticized bin Salman for Khashoggi’s killing.

Ben Cahill, a senior fellow at the Center for Strategic and International Studies, said the Saudis hoped the production cuts would give OPEC+ control of oil prices and ensure enough oil revenue to protect their country from a recession. .

“The macro risk is getting worse all the time, so they have to react,” Cahill said. “They are aware that a cut will irritate Washington, but they are managing the market.”

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Reporting by Steve Holland, Timothy Gardner and Jarrett Renshaw in Washington; Dmitry Zhdannikov in London, Aziz El Yaakoubi in Riyadh, Ghaida Ghantous in Dubai and Ahmed Tolba in Cairo. Editing by Heather Timmons, David Gregorio and Jane Merriman

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