The Biden administration has taken multiple steps to curtail and prevent additional fossil fuel production in the United States.
Their failing energy plan includes getting more supply from OPEC, but they just received some more bad news.
The OPEC+ group of oil-producing nations agreed Wednesday to slash oil production by 2 million barrels per day, Reuters reported, seeking to stabilize oil prices following months of decline.
Their decision is another international loss for Biden considering his visit to Saudi Arabia earlier this year urging Saudi Arabia to increase, not cut production. It also underscores the strains in the US-Saudi relationship. diplomatic tension and Biden’s declining influence in the region.
United Arab Emirates Energy Minister Suhail Al Mazrouei insisted the decision was “technical.”
“It’s very important that it remains as a technical decision and it’s not political,” he told reporters. “That’s why it’s important to look at technical side of the equation and look at any concerns regarding the economy and the status of the economy.”
US officials are making calls trying to push back against the move, according to people familiar with the situation.
OPEC+ is also considering smaller curbs of 1 million to 1.5 million barrels a day, delegates said.
Bloomberg is reporting
Even a cut on that scale would be a blow to a global economy that is already suffering historic inflation shocks. Washington is looking at potential responses, as President Joe Biden tries to tame pump prices ahead of the mid-term elections in November.
“It is hard to overstate how anxious the Biden administration is about a potential resurgence in oil prices,” Bob McNally, founder of Rapidan Energy, said in Vienna. “A large OPEC+ cut would antagonize the White House, though officials may wait to see how prices respond afterward before pulling the trigger on policy responses.”
White House officials have asked the US Energy Department to analyze whether a ban on exports of gasoline, diesel, and other refined petroleum products would lower prices, Bloomberg reported on Tuesday. It’s a controversial idea but one that’s gaining traction in some corners of the Biden administration.
As OPEC+ ministers meet in Vienna, European and US leaders are working to prevent Russia from selling crude further adding to the global shortage.
The EU approved a new sanctions package trying to curtail Russia’s ability to sell crude, while the US is working with allies to implement a price cap on Russian oil.
The US may also consider resorting again to using its Strategic Petroleum Reserve to tame prices, according to some analysts.
The problem with this approach is, by July 29, the SPR had reached its lowest level since 1985. Compared to January 2021, 26% of SPR’s oil reserves have been depleted. Not only has the president’s panicky drawdown not given families meaningful relief at the pump, but it is also leaving the U.S. vulnerable as peak hurricane season approaches and Russia continues its war in Ukraine.
“The move from OPEC+ could trigger US countermeasures, including the additional releases from the Strategic Petroleum Reserve,” JP Morgan analysts said in a note.
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