Pressure from the American president is unlikely to convince the kingdom's leaders to pump more barrels into the world market.
President Joe Biden insists that his trip to Saudi Arabiapursues all possible goals: from strengthening security in the region to coordinating policies with the kingdom. But in reality, the only thing the US leader needs is more oil.
Biden's pressure, most likely, will not convince the authorities of Saudi Arabia to pump more barrels into world markets, the prices of which have forced a gallon of fuel to rise to $5, Politico writes. It is not known whether Saudi Arabia can even ramp up production fast enough to make a difference, despite the fact that the country has the largest oil reserves in the world. And even if Biden's pressure somehow works, it will be a shock to the markets, which have started to soften in recent days. Thus, energy experts warn that America's economic pain will continue.
So the Biden administration promises that Biden's attention will be focused on “bigger” than energy.
“We hope to advance our interests on a wide range of issues, from terrorism to climate change to Iran. That's why the president's trip is needed,” an unnamed senior administration official told Politico.
The publication writes that this official admitted that the oil issue will inevitably have to be raised both during Biden's discussions with the government of Saudi Arabia and during the time of the meeting with the representatives of the five countries of the Persian Gulf, which will be held on Sunday. Especially considering the fact that global energy markets are experiencing turmoil after Russia's decision to invade Ukraine.
“We definitely expect to allocate time for discussions with the Cooperation Council of the Arab States of the Persian Gulf and with representatives of Saudi Arabia on the issue of energy security,” the American official told the publication.
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For decades, oil supplies have been an unavoidable issue in the relationship of US presidents with the desert kingdom. Donald Trump scolded OPEC on Twitter, and George W. Bush personally pleaded with Riyadh to increase production. Biden last weekend published an article in the pages of the Washington Post, in which he explained his trip to Saudi Arabia, despite the promise to turn the country into a pariah for human rights violations. However, the American president did not mention the issue of energy. Instead, he emphasized human rights and the desire to “strengthen strategic partnership” in the Middle East.
If Biden had focused on trying to persuade the kingdom to increase oil production or weaken OPEC policy, Saudi Arabia would likely be unwilling or unable to comply, analysts and diplomats say. Instead, the best outcome of the talks could be relatively modest agreements that Saudi Arabia will invest more in its production or expand capacity at the Motiva Enterprises refinery in Texas, which is owned by the kingdom's state-owned company. So what can the US expect from Biden's trip to Riyadh?
“Not many. For diplomatic reasons, I don't expect Biden to come out of there with a promise to increase oil production. For the United States, such a request would be too blunt, and for Saudi Arabia – too straightforward,” said David Galvin, head of the Atlantic Council's Center for Global Energy and a former adviser to the State Department on energy issues.
The expert believes that Biden needs the visit to fulfill his part of the actual agreement with OPEC+. In June, the American president asked the cartel to increase production earlier than planned. And OPEC+ silently did it. The countries of the cartel announced that in July their collective oil production will increase by 648,000 barrels per day. Although earlier they planned to raise the indicator by 400 thousand barrels and only in August. However, OPEC+ has not yet fully fulfilled its promise. And there is speculation that Saudi Arabia and OPEC in general do not have the capacity to do so.
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A gradual fall in prices may make discussions about further production increases redundant, analysts say. The benchmark oil price in the US has exceeded $120 a barrel several times this year. And as of Tuesday, it has fallen to $96 thanks to increased domestic production, as well as the market's awareness that Russian oil is being shipped to China and India in bulk. In addition, prices fell on fears that the recession will reduce demand for energy in the coming months. But the more the price declines, the more the major producers want to keep extra capacity to increase supply for future needs.
“I think the US and Saudi Arabia (as well as the UAE) came to an agreement last month. And Biden's trip this week won't change anything on the oil policy front. Saudi Arabia and the UAE will not use their additional production capacity and may signal a willingness to increase output later this year if needed,” said Bob McNally, chairman of the Rapidan Energy analyst firm and adviser to the National Security Council during the George W. Bush administration. .
