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US says ‘nothing off table’ in response to Opec+ oil cuts

by Atlanta Business Journal

The White House said nothing was off the table a day after Opec+ angered Washington with sharp cuts to world oil supply, as it considered responses — including new releases from the US Strategic Petroleum Reserve to contain energy prices.

The Opec+ cartel led by Saudi Arabia and Russia on Wednesday agreed to lower production targets by 2mn barrels a day, or roughly 2 per cent of global oil consumption. Oil markets rose further on Thursday, with Brent crude reaching $94 a barrel.

Brian Deese, director of the White House’s National Economic Council, described the decision as “unnecessary and unwarranted” and said the US was looking at further sales from its strategic stockpile, which has already been drawn down by more than 200mn barrels in the past year.

He did not rule out an export ban or limiting exports on petrol and other refined products when reporters asked if the idea was under consideration. “What the president has directed us, and it continues to be the case, is to take nothing off of the table,” Deese said.

The oil industry has become increasingly worried over the prospect of curbs on refined oil product exports being introduced in an effort to bring down domestic fuel prices at the pump. US energy secretary Jennifer Granholm in August told oil refiners to build domestic inventories rather than exporting more fuel.

Europe’s energy crisis would likely be made worse by such a move, as the continent imports significant quantities of fuel from the US and is soon to halt all seaborne Russian oil imports.

Opec+ approved its output cut after US President Joe Biden made a controversial visit to Saudi Arabia over the summer in an effort to increase supplies of oil. He said after his meeting with Crown Prince Mohammed bin Salman that he expected Saudi Arabia to “take further steps” to increase oil supplies in the coming weeks.

On Thursday, Biden said that he did not regret his visit. “The trip was not essentially for oil. The trip was about the Middle East and about Israel and rationalisation of positions. But it is a disappointment and says that there are problems,” the president said to reporters.

He said he had not yet decided how to respond to Opec+’s announcement. “We are looking at alternatives. We haven’t made up our minds yet,” Biden said.

Opec+’s decision has given ammunition to lawmakers critical of the US-Saudi relationship and who questioned the wisdom of Biden’s about-face on relations with Prince Mohammed.

Three Democratic members of Congress said Wednesday they would introduce legislation that would mandate the removal of US troops and missile defence systems from Saudi Arabia and the United Arab Emirates.

“We see no reason why American troops and contractors should continue to provide this service to countries that are actively working against us. If Saudi Arabia and the UAE want to help Putin, they should look to him for their defence,” House Democrats Tom Malinowski, Sean Casten and Susan Wild said in a statement.

Deese said White House officials were disappointed by the Opec+ move as energy supplies remained tight around the world. “If you look at the global energy picture and oil picture, the lack of supply continues to be a significant challenge,” he said.

The actual fall in output from the Opec+ group’s lowered target is likely to be closer to 1mn b/d, rather that the headline of 2mn b/d, as many of its weaker members have struggled to hit production targets in recent months.

“Certainly the impact on production will be significantly lower than that headline that they announced,” Deese said.

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