The White House accused OPEC+ of allying with Russia after Saudi Arabia led the group in agreeing deep oil production cuts, prompting a backlash from countries already grappling with a rise in energy inflation caused by Moscow’s invasion of Ukraine.
The OPEC+ group said it would cut production targets by 2 million barrels per day, equivalent to 2 percent of global supply, after its first in-person meeting two years ago in Vienna. The actual production cut is likely to be closer to 1 million barrels per day as many of the weaker members have struggled to meet production targets in recent months.
The decision to cut came despite intense pressure from the US government ahead of the meeting and represented a major breach for the Biden administration, which is seeking to lower oil and gasoline prices ahead of the meeting. Critical midterm elections In November, Russia starved of energy revenue.
The Biden administration criticized the move over the cuts, saying it was a “short-sighted decision” at a time when “maintaining global energy supplies is critical.” A White House spokesman told reporters aboard Air Force One that it was “obvious” that OPEC+ was “allied with Russia,” according to Reuters.
Saudi Energy Minister Prince Abdulaziz bin Salman dismissed suggestions that the group’s cuts would harm oil consumers, saying instead that the group’s actions are aimed at encouraging long-term investment in oil production.
“Show me where the act of aggression is,” he said in response to questions that followed the announcement. Energy markets demanded “guidance without which investment will not happen”.
In response to the OPEC+ decision, the US said it would continue to release oil from its strategic stocks “as appropriate” and was exploring “additional responsible measures” to raise domestic oil supplies.
The statement added that Biden would also work with Congress on legislation to “reduce OPEC’s control of energy prices,” an apparent reference to anti-cartel legislation known as NOPEC that US lawmakers have long considered but not passed.
Oil prices have risen more than 5 percent since Friday in the run-up to the meeting, and Brent international standard It rose to $93.95 a barrel after news of the cut.
Analysts said that the Saudi move, which will damage the efforts of Western governments to reduce the income of Russian oil used to continue Its war in Ukrainemarks a significant moment in the 75-year energy alliance between Riyadh and the United States.
Saudi Arabia has put OPEC on a collision course with the free world. “They have stood by Russia in the name of preventive oil market management — just as consumers around the world are battling inflation and the rising cost of living,” said Bill Farren Price, a veteran OPEC observer at consultancy Envirus. “There must be political consequences for Riyadh.”
The cartel’s decision to cut comes hours after European Union countries agreed to a US plan to impose it price cap On Russian oil exports, an attempt by Western countries to lower the prices of crude oil and fuel. Saudi Arabia and other Gulf OPEC countries fear that this plan will lower oil prices across the board and could even be used against them in the future.
“This is very political and a very clear sign of OPEC’s dissatisfaction with the price ceiling,” said Amrita Sen, chief oil analyst at Energy Aspects. “Regardless of whether the price cap is actually effective, they see a dangerous precedent in that.”
OPEC Secretary-General Haitham Al-Ghais said from Kuwait that the group provides “security” and “stability” to energy markets.
He said, “Everything has a price.” “Energy security also comes at a price.”