What does OPEC’s, and particularly Saudi Arabia’s, humiliation of Joe Biden say about the U.S.’s current geopolitical standing? From Irena Slav at oilprice.com:
- Despite repeated requests from the Biden Administration not to cut oil production, OPEC+ went ahead and did just that.
- The geopolitical rationale behind OPEC+’s move might be more worrying than the output cut itself.
- Besides suspending deliveries of weapons to Saudi Arabia, there’s little that the U.S. can do to raise the pressure on the Kingdom.
This week, OPEC+ made a decision unprecedented in its history and the history of OPEC. The extended cartel approved production cuts of 2 million bpd at a time of steady demand, tight supply, and runway inflation in the world’s biggest economies. More significantly, perhaps, OPEC+ made this decision despite Washington’s numerous attempts to change the mind of the cartel leaders, notably Saudi Arabia and the UAE.
Just a day before the OPEC+ meeting, CNN reported that all available human resources in the administration had been mobilized, with the White House “having a spasm and panicking,” per one unnamed official.
Top officials such as Amos Hochstein and Janet Yellen had been tasked with talking the Saudis and the Emiratis out of a production cut. Talking points included a not too thinly veiled threat of reputational and foreign relations damage: “There is great political risk to your reputation and relations with the United States and the west if you move forward.” Yet the Saudis and the Emiratis did just that. They went forward.