DUBAI, United Arab Emirates (AP) — Saudi Arabia said on Thursday that the United States had urged it to postpone a decision by OPEC and its allies — including Russia — to cut production by a month of oil. Such a delay could have helped reduce the risk of a spike in gasoline prices ahead of the US midterm elections next month.
A statement released by the Saudi Foreign Ministry does not specifically mention the Nov. 8 election in which US President Joe Biden is trying to maintain his slim Democratic majority in Congress. However, he said the United States had “suggested” the cuts be delayed for a month. Ultimately, OPEC announced the cuts at its Oct. 5 meeting in Vienna.
Delaying the cuts would likely have delayed any rise in gas prices until after the election.
Rising oil prices – and by extension rising gasoline prices – have been a key driver of inflation in the United States and around the world, adding to global economic woes as the months-long war of Russia versus Ukraine has also disrupted the global food supply. For Biden, rising gas prices could affect voters. He and many lawmakers have warned that America’s longstanding security relationship with the kingdom could be reconsidered.
The Saudi Foreign Ministry’s decision to issue a rare and lengthy statement showed just how strained relations between the two countries have become.
The White House on Thursday pushed back against the idea that the requested postponement was related to the US election and instead tied it to economic considerations and Russia’s war on Ukraine.
“We presented Saudi Arabia with an analysis to show that there was no market basis to cut production targets, and they could easily wait for the next OPEC meeting to see how the things were changing,” said John Kirby, strategic communications coordinator at National Security. Advice.
“Other OPEC countries let us know privately that they also disagreed with the Saudi decision, but felt compelled to support the Saudi leadership,” he added.
US-Saudi relations have been strained for the 2018 murder and dismemberment of Washington Post columnist Jamal Khashoggi, who Washington says came on the orders of Saudi Crown Prince Mohammed bin Salman. Meanwhile, rising energy prices provide a weapon Russia can use against the West, which has armed and supported Ukraine.
The Saudi Foreign Ministry statement acknowledged that the kingdom had spoken to the United States on the postponement of the cut of 2 million barrels of OPEC+ announced last week.
“The Kingdom’s government has clarified through its ongoing consultation with the US administration that all economic analyzes indicate that postponing the OPEC+ decision by one month, as suggested, would have had negative economic consequences. “, the ministry said in its statement. .
The ministry statement confirmed the details of an article from the Wall Street Journal this week, citing unnamed Saudi officials as saying the United States was seeking to delay the OPEC+ production cut just before the midterm elections. The Journal quoted Saudi officials describing the move as a political gamble by Biden ahead of the vote.
The kingdom also criticized attempts to link its decision to Russia’s war against Ukraine.
“The kingdom stresses that while it strives to preserve the strength of its relations with all friendly countries, it affirms its rejection of any diktat, action or effort aimed at distorting its lofty objectives of protecting the world economy from volatility. of the oil market,” he said. . “Solving economic challenges requires establishing a non-politicized constructive dialogue, and considering with wisdom and rationality what serves the interests of all countries.”
Saudi Arabia and the neighboring United Arab Emirates, major OPEC producers, voted in favor of a UN General Assembly resolution on Wednesday condemn the “illegal annexation attempt” by Russia of four Ukrainian regions and demand its immediate cancellation.
Once strong enough to stop the United States with its 1970s oil embargo, OPEC needed non-members like Russia to force through a production cut in 2016 after prices crashed below $30. per barrel in a context of increased American production. The 2016 deal spawned what is known as OPEC+, which joined the cartel in cutting production to help boost prices.
The coronavirus pandemic briefly saw oil prices slide into negative territory before air travel and economic activity rebound from lockdowns around the world. Benchmark Brent crude was above $92 a barrel early Wednesday, but oil-producing nations fear prices could fall sharply amid efforts to curb inflation.
Biden, who called Saudi Arabia a “pariah” during his 2020 election campaign, visited the kingdom in July and punched Prince Mohammed ahead of a meeting. Despite the awareness, the kingdom has supported keeping oil prices high to fund Prince Mohammed’s aspirations, including his $500 billion futuristic desert city project called Neom.
On Tuesday, Biden warned of the repercussions for Saudi Arabia from the OPEC+ decision.
“There are going to be consequences for what they did, with Russia,” Biden said. “I’m not going to get into what I would consider and what I have in mind. But there will be – there will be consequences.
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Associated Press writer Aamer Madhani in Washington contributed to this report.
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Follow Jon Gambrell on Twitter at www.twitter.com/jongambrellAP.