OPEC snubs Biden to cut oil production by 2 MILLION barrels a day: After the White House “begged middle east nations not to cut production” just five weeks before midterm elections, gas prices are set to go UP.
The Cutback Is The Biggest OPEC+ Has Rendered Since The COVID-19 Pandemic Began.
With the OPEC+ alliance’s announcement that it will CUT oil production by up to two million barrels per day, gas prices could go up again for Americans. This could be a massive setback for the Biden administration.
Energy ministers from the OPEC cartel, led by Saudi Arabia, and allied non-members like Russia got together in person for the first time since early 2020 at the group’s headquarters in Vienna.
Their production cutback, which they announced on Tuesday, is the biggest one since the COVID-19 pandemic began.
Even though the West is trying to choke oil and gas sales from paying for Russia’s illegal invasion of Ukraine, this is likely to boost Moscow.
It comes after the price of a barrel of oil dropped by about a quarter in just three months. It is now worth around $90, and people are worried about a global recession.
Prices Jump By 60 Cents/Gallon
The Washington Post reports that prices have increased by up to 60 cents per gallon in some parts of the US, making an already dangerous situation even worse.
President Joe Biden was asked about OPEC+’s decision as he got on Marine One before a visit to hurricane-damaged Florida. He told reporters that he “needs to see the details.”
Reports say he said he was “concerned” and that it was an “unnecessary” step.
Jake Sullivan, the National Security Advisor at the White House, and Brian Deese, the Director of the National Economic Council, said in a joint statement that Biden is “disappointed by the shortsighted decision.”
“At a time when keeping a steady supply of energy around the world is of the utmost importance, this decision will hurt lower- and middle-income countries the most, which are already struggling with high energy prices,” said the statement.
Republicans had criticized Democrats for not saying much about how gas prices are steadily going up, even though the White House was happy when they went down over the summer.
They also hinted that a new legislative effort could be on the table, saying, “In light of today’s action, the Biden Administration will also consult with Congress on additional tools and authorities to reduce OPEC’s control over energy prices.”
The effects of the announcement on the pumps aren’t apparent yet, but a report says that the decision has left the Biden administration scrambling to avoid a “total disaster.”
During a press conference on Tuesday, OPEC+ was asked how much Biden’s release of the strategic petroleum reserves had “distorted true price discovery.”
“I wouldn’t say it’s a lie. This was done at the right time. They said, “I’m sure that if it hadn’t happened, things might be different than they are now.”
Panic Over OPEC’s Decision
After the White House celebrated gas prices dropping at a record rate this summer, OPEC’s decision after their meeting on Wednesday could make them go back up again. They have already begun to inch back up in the last few weeks.
But a sudden rise would be a big problem because the midterm elections are coming up in just over a month. It has been found out that the White House is “having a spasm and panicking” about what could happen.
Reports say that high-level economic and foreign policy officials have been trying to convince allies in the Middle East not to vote to cut production.
In an interview on Fox News Wednesday morning, the National Security Council’s Coordinator for Strategic Communications, John Kirby, played down the effects of the cut.
“They are lowering their numbers a little bit here.” Kirby said, “OPEC plus has been telling people that they are making 3.5 million more barrels than they are.”
So, in some ways, this announced decrease brings them back into line with what they make. He also said that there were no “dramatic changes” in oil price, noting that Wednesday’s prices stayed in the low 90s.
In the past few weeks, gas prices in some areas have increased by nearly 60 cents.
Press Secretary Karine Jean-Pierre was asked on Tuesday about how the White House used to celebrate when gas prices went down, but now that they are going back up, they have been pretty quiet.
Jean-Pierre said that gas prices have gone up worldwide and blamed this on “the COVID-19 pandemic and Putin’s war” in Ukraine.
The Biden official said, “We know there’s more work to do, and we’ve never said we’re done here.”
“But the truth is that gas prices have gone down faster than they have in over a decade. So this president is to blame.’
Analysts at Commerzbank said that a production cut could help Russia by raising prices before the end of the year when the European Union will ban most oil imports from Russia as a punishment for Russia’s invasion of Ukraine.
This summer, oil prices went up because markets were worried about losing Russian supplies because of sanctions related to the war in Ukraine. However, prices went down because of worries about recessions in major economies and China’s COVID-19 restrictions, which made people less likely to buy crude.
Earlier this year, when oil prices were rising, President Joe Biden flew to Jeddah to meet with Saudi officials, but it looks like that trip hasn’t done much to stop OPEC+ from cutting production.
His meeting with Crown Prince Mohammed Bin Salman angered Republicans back home.
GOP lawmakers said Biden was “begging” for oil from a known human rights abuser and criticized him for not doing more to increase domestic production.
Kirby has since pushed back and said Biden’s trip to Saudi Arabia was “not about oil.”
He did agree with calls, mostly from the right, that the US should “be less dependent on OPEC+ and foreign producers of resources like oil.”
Kirby said, “That’s why the president raised the amount of oil taken out of the Strategic Petroleum Reserve: to help stabilize things.”
“This is also why the president has given out thousands more leases for drilling in the continental United States, which oil companies haven’t used to their full potential.”
After the OPEC+ production cut was announced, however, Republican lawmakers began to attack the Biden administration.
Apart from a small cut in oil production last month, the big cut is a sudden change from the months of restoring deep cuts during the worst pandemic. It could help alliance member Russia get through a possible European oil import ban.
In a statement, OPEC+ said the decision was made because “the global economic and oil market outlooks are uncertain.”
Because OPEC+ members can’t meet the quotas set by the group, the production cut won’t have as much of an effect on oil prices or the price of gasoline made from crude.
The alliance also said it’s renewing cooperation between OPEC members and non-members, with Russia being the most important. The deal was set to end at the end of the year.