Saudi Reinforces OPEC Allegiance Amid Biden’s Reconciliatory Visit
After calling the Middle Eastern oil giant a “pariah state” during his presidential campaign in 2019, global oil market volatility and resulting inflation in the United States forced the hand of Joe Biden as he paid a visit to the Kingdom of Saudi Arabia recently.
The Saudis however were unrelenting in emphasising that the decision to pump more oil into the international market remained in the hands of the ministers of the Organisation of Petroleum Exporting Countries and its allies (OPEC+). A Bloomberg report quoted the American president as saying the Saudis shared his “urgency” to boost oil supply and that he expected “further steps in the coming weeks.”
“We listen to our partners and friends from all over the world especially consumer countries,” Foreign Minister Prince Faisal bin Farhan reportedly told journalists. “But at the end of the day, OPEC+ follows the market situation and will supply energy as needed.” The US and its allies placed sanctions on Russia, the second largest oil exporter in light of its invasion of Ukraine and a key member of OPEC+, which has exploded market volatility and has elevated political risks for Biden in his home country. The trip to Saudi Arabia, though unpopular among Biden’s base in the US, was a necessity, as bringing the Saudis back into the fold was critical to American strategic interests in the Middle East.
The Minister of State for Foreign Affairs in Saudi Arabia, Adel Al-Jubeir, reportedly played down the idea of any agreement after Biden was quoted by media houses saying a common ground was shared and reinforced the kingdom’s policy of sticking to OPEC*’s decisions. The OPEC ministers would meet on August 3 to make decisions o market intervention, though most members’ production capacity, with Nigeria part, had been stretched to the maximum. Amidst this, Biden’s visit to the Middle East was hinged mainly on negotiating with oil producers to place a cap on Russian oil output.
Brent Crude traded at $101.1 per barrel as of the writing of this report. Analysts have predicted a short-term bearish impact of the US Federal Reserve’s increase of interest rates on the price of oil, but an increase in Russian output would send prices back higher. According to a report by Oil Price, many believe there was a minimal chance of this happening as there were risks attached to Russia’s response. Apart from that, “Most, or all, buyers of Russian oil would need to co-operate for a price cap to effectively hinder Russian revenues but China and even India and Turkey are unlikely to agree,” Amrita Sen of Energy Aspect was quoted as telling the Financial Times.
