U.S., Saudi Arabia clash over reason for OPEC+ oil cuts
Global News
The IEA on Thursday added that OPEC's move could worsen demand, saying "higher oil prices may prove the tipping point for a global economy already on the brink of recession."
Saudi Arabia rejected as “not based on facts” criticism of an OPEC+ decision last week to cut its oil production target despite U.S. objections, and said on Thursday that Washington’s request to delay the cut by a month would have had negative economic consequences.
The White House pushed back against that on Thursday, saying it presented the Saudis with an analysis that showed the cuts could hurt the world economy. The back-and-forth has added to what has already been a frosty period of relations for the two countries, who have had an energy-for-security alliance for decades.
OPEC+, the producer group comprising the Organization of the Petroleum Exporting Countries (OPEC) plus allies including Russia, last week announced a cut of two million barrels per day to its production target after weeks of lobbying by U.S. officials against such a move.
The move came even though fuel markets remain tight, with inventories in major economies at lower levels than when OPEC has cut output in the past.
The OPEC+ cut has raised concerns in Washington about the possibility of higher gasoline prices ahead of the November U.S. midterm elections, with the Democrats trying to retain their control of the House of Representatives and Senate.
U.S. President Joe Biden pledged earlier this week that “there will be consequences” for U.S. relations with Saudi Arabia after OPEC+’s move.
The OPEC+ decision was adopted through consensus, took into account the balance of supply and demand and was aimed at curbing market volatility, the Saudi foreign ministry said in a statement on Thursday.
The Saudi foreign ministry statement referred to consultations with the United States prior to the Oct. 5 OPEC+ meeting in which it was asked to delay the cuts by a month.