Saudi Arabia puts US relationship on the back burner
Saudi reluctance to corral OPEC+ into raising production despite demands from the White House raises the question of what the US offers the kingdom in return.
A short and productive November meeting saw OPEC+ quickly trot out a series of eloquently crafted messages which emphasized that, in spite of rising oil prices and short-term growth demand, the group would be holding firm to its current production plans.
Each communique chimed soundly with the chief cheerleader Saudi energy minister Abdelaziz bin Salman Al Saud’s (AbS) lengthy exposition of the meeting where he made it clear OPEC+ would only increase production by 400kbd per month – as agreed in July – and resist the pressure from the US or other major consuming countries to pump more.
AbS argued that because global demand will ease off and inventories start to fill in December and Q1 of 2022, the market will find a natural balance to serve interests of producers and consumers alike. And he cautioned that, as economic headwinds in 2022 and the COVID-19 Delta variant continue to pose a threat to growth, flooding the market now would be folly.
Saudi Arabia and OPEC+ sticking to their guns in this way not only irks the Biden administration but also gives the US cause to consider a strategic petroleum reserve release. The kingdom – and crown prince Mohammed bin Salman in particular – have rejected the perfect opportunity to assist the US and put aside some of the differences separating the two.
Click here to continue reading the full version of this Expert Comment on the Chatham House website.
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