Some officials in the Biden administration were outraged after the OPEC+ cartel announced production cuts, arguing it was a direct insult to the president and could hurt Democrats in the 2022 midterm elections by pushing up gas prices.
U.S. officials are now grappling with a potential price surge that could help fund Russia’s war in Ukraine, exacerbating major challenges facing the U.S. and European economies and giving Republicans a strong new argument for inflation.
OPEC and allies move to cut oil output, sparking White House reaction
A White House official called OPEC’s decision a “disaster.” Another said administration officials viewed the move as a deliberate provocation designed to increase Republicans’ chances so close to the election. Other officials said they did not interpret the malicious intent of the Saudi decision, but saw it as a shortsighted effort to maximize oil profits despite the economic and geopolitical consequences.
Biden said Thursday that the cartel’s decision did not diminish the significance of his July visit, but was still disappointing. “This trip is not about oil per se. The trip is about the Middle East and Israel and the rationalization of positions,” he told reporters. “But it’s disappointing.”
Adrian Watson, a spokeswoman for the National Security Council, said Biden’s advisers had all agreed to the visit this summer. “The president’s senior national security team has reached a consensus on the importance of this trip in advancing U.S. national security interests,” she said in a statement.
But that has not quelled criticism of the Saudi government.
“They’re spitting on Joe Biden,” said Dean Baker, a White House ally and economist at the Center for Economic and Policy Research, a left-leaning think tank. “Anyone who thinks this trip is a good idea has some explanation to do.”
Even before Biden flew to the Middle East in July and collided with the country’s de facto leader, Saudi Crown Prince Mohammed bin Salman, White House aides knew the trip would draw criticism. Biden has declared that human rights will be “at the center” of his foreign policy and said he would make the oil-rich monarchy “untouchable.” But the president also remains acutely aware of the burden surging oil prices have placed on the American middle class.
Biden’s top aides on the Middle East and energy, Brett McGurk and Amos Hochstein, pushed the visit as a way to strengthen ties and improve Washington’s ability to project influence in the Middle East As a means of deliberation, the oil-rich country was exploring ties with Moscow at the time, according to U.S. officials and congressional aides who spoke on the condition of anonymity to discuss U.S. policy.
Administration officials have long been deeply divided over how to treat the oil-rich dictatorship. Those who support apathy point to Saudi Arabia’s unpopular war in Yemen, Riyadh’s poor human rights record and the killing of Washington Post columnist Jamal Khashoggi as reasons to overhaul relations between the two countries.
Biden heads to Saudi Arabia amid unease and criticism
Many senior State Department and USAID officials also said they believed they had leeway given the United States was growing into an oil-producing energy superpower. A clean break with former President Donald Trump’s very close ties to the kingdom also has broad appeal among Biden’s political appointees.
Secretary of State Anthony Blinken also expressed concerns about the trip to Saudi Arabia, some U.S. officials said.
“Secretary Blinken fully supports the administration’s engagement with our regional partners on the multiple interests we have,” State Department spokesman Ned Price said.
McGurk and Hochstein’s support for the visit began to gain favor at the White House in September 2021, as rising oil prices and discontent in the Gulf reportedly led the United Arab Emirates and Saudi Arabia to reject repeated U.S. demands for more oil production requirements. Senior officials and congressional aides familiar with the matter. The decisive moment for the push to draw closer with Saudi Arabia came when Russia invaded Ukraine on February 2. 24. Leading to soaring energy prices and high natural gas costs, has Biden’s domestic political responsibilities, mired in geopolitical setbacks.
Some Democrats, already skeptical of U.S.-Saudi relations, seized on OPEC+’s decision to criticize the visit.
“I think it’s time for a complete reassessment of the U.S. alliance with Saudi Arabia,” the senator said. Chris Murphy (D-Conn.), chairman of the Senate Foreign Relations Subcommittee on the Middle East, told CNBC.
A Democratic congressional aide close to administration officials, like others, Discussing U.S. policy on condition of anonymity, he said: “The visit caused a lot of debate within the administration, and I don’t know how people can now say it wasn’t a mistake.”
White House officials have strongly denied that the purpose of the trip was to stimulate Saudi oil production. U.S. officials supporting U.S.-Saudi relations say critics misunderstood the purpose of the visit and overestimated Riyadh’s ability to lower gasoline prices for the average American. They also highlighted that Saudi Arabia produces 11.1 million barrels of oil per day, a rate the country has never maintained in the past.
But the OPEC+ decision means the increased output will end sooner than U.S. officials hope.
Energy analysts also said Saudi Arabia was under financial pressure to cut production as oil prices fell by nearly $80 a barrel in about two weeks last month. U.S. officials have argued to their Saudi counterparts that there is little risk of letting prices fall below that point, but the Saudis won’t budge, according to people familiar with the discussions on condition of anonymity to discuss the sensitive conversations. Saudi officials did not immediately respond to requests for comment.
Defenders of the trip also said it was justified given the other goals of the visit, including promoting a ceasefire in Yemen’s protracted civil war. Aid groups say the ceasefire, first reached in April, has reduced violence by 60 percent. However, the warring sides have recently failed to extend a six-month ceasefire, and U.S. officials are now worried about a “return to war,” U.S. special envoy for Yemen Tim Lundkin told reporters on Wednesday.
During the trip, U.S. officials also worked to open Saudi airspace to flights serving Israel and urged the United Arab Emirates to stop building Chinese military bases — an effort underway.
Even Saudi Arabia’s staunchest defenders acknowledged that the timing of the cuts was a major blow to the United States, despite a backlash from U.S. diplomats who pressed their counterparts in the early hours of Wednesday to delay the decision. .
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Officials across the Biden administration — including the Department of Energy, the State Department and the National Economic Council — raced Thursday to draft a policy response to the announcement. No obvious solution is obvious. Energy officials have begun considering a potential ban on U.S. fuel exports, although such a measure would require the administration to abandon European allies that rely on U.S.-produced natural gas.
White House officials have also been exploring the possibility of easing sanctions on Venezuela to supplement some of the oil losses from OPEC production cuts. It’s a long-term goal, however: The United States believes Venezuelan President Nicolas Maduro needs to engage with the Venezuelan opposition before any sanctions are lifted.
Sullivan and National Economic Council Director Brian Diess said in a statement Wednesday they would consult with Congress on additional mechanisms “to reduce OPEC’s grip on energy prices” — a sign that U.S. policymakers may have Interest in repealing a long-standing federal antitrust waiver of a law that allows consortia to effectively coordinate prices. However, the measure required congressional approval and faced industry resistance, greatly reducing the likelihood of its implementation.
Yasmeen Abutaleb contributed to this report.