US and Saudi Arabia rift widens over the OPEC+ oil output cut

The already uneasy relations between the White House and Saudi Arabia’s royal family have been further strained earlier this week due to the OPEC+ organisation’s decision to cut oil production despite stiff US opposition, according to several interviews with government officials in Washington and the Gulf.

The White House pushed hard to prevent the OPEC output cut, these sources claimed.

President Joe Biden hopes to keep US gasoline prices from spiking again ahead of midterm elections, especially that his Democratic party is struggling to maintain control of the US Congress.

Washington also wants to limit Russia's energy revenue during the Ukraine war.

US efforts to stop the oil output cut

The US administration lobbied OPEC+ for weeks. In recent days, senior US officials from energy, foreign policy and economic teams urged their foreign counterparts to vote against an output cut, according to two sources familiar with the discussions.

Senior US officials, including Amos Hochstein, Biden's top energy envoy, along with national security official Brett McGurk and the administration’s special envoy to Yemen Tim Lenderking, travelled to Saudi Arabia last month to discuss energy issues, including the OPEC+ decision.

They failed to prevent an output cut, just as Biden did after his own July visit.

A source briefed on the discussion said US officials “tried to position it as 'us versus Russia,'” suggesting Saudi officials needed to make a choice. The Saudis replied that if the United States wanted more oil on the markets, it should start producing more of its own.

The United States is the world's No. 1 oil producer and also its top consumer, according to data from the US Energy Information Administration.

Saudi Arabia’s justification for oil output cuts

Saudi Arabia’s Energy Minister Prince Abdulaziz explained OPEC’s position on Saudi TV Wednesday:

“We are concerned first and foremost with the interests of the Kingdom of Saudi Arabia and then the interests of the countries that trusted us and are members of OPEC and the OPEC + alliance.”

OPEC weighs its interests with "those of the world because we have an interest in supporting the growth of the global economy and providing energy supplies in the best way," he said.

Additionally, Washington's handling of the Iran nuclear deal and withdrawal of support for a Saudi-led coalition's offensive military operations in Yemen have upset Saudi officials, as have actions against Russia after the February 2022 invasion of Ukraine.

US push for a price cap on Russian oil is causing uncertainty as there is a "lack of details and the lack of clarity" about how it will be implemented, Energy Minister Prince Abdulaziz bin Salman told Bloomberg TV. A source briefed by Saudi officials said the kingdom views it as "a non-market price-control mechanism that could be used by a cartel of consumers against producers."

A Biden-directed sale of 180 million barrels of oil in March from the U.S. Strategic Petroleum Reserve put downward pressure on oil prices. In March, OPEC+ said it would stop using data from the International Energy Agency (IEA), a Western oil watchdog, due to Saudi-led concerns that the United States had too much influence.

White House reacts to OPEC’s decision

On Thursday, President Biden called the Saudi decision “a disappointment”, adding Washington could take further action in the oil market.

“Look it's clear that OPEC Plus is aligning with Russia,” White House press secretary Karine Jean-Pierre said on Wednesday. She would not elaborate on how the output cut would affect US-Saudi relations. In the U.S. Congress, Biden's Democrats called for the withdrawal of US troops from Saudi Arabia and spoke about taking back weapons.

“I thought the whole point of selling arms to the Gulf States despite their human rights abuses, nonsensical Yemen War, working against US interests in Libya, Sudan etc, was that when an international crisis came, the Gulf could choose America over Russia/China,” Senator Chris Murphy, a Democrat, said on Twitter.

Crown Prince and Joe Biden

Weeks after Biden took office as president, Washington released a report tying the 2018 killing of journalist Jamal Khashoggi to Crown Prince Mohammed bin Salman.

The prince, son of King Salman, has denied ordering the killing but acknowledged it took place “under my watch”. The prince became prime minister last month and his lawyers have been arguing in a US court that this makes him immune from prosecution in the Khashoggi death.

Biden's trip to Jeddah, Saudi Arabia, in July for a Gulf summit was aimed at patching up relations, but he also levied harsh criticism of bin Salman over Khashoggi's murder.

Ben Cahill, a senior fellow at the Center for Strategic and International Studies, said the Saudis hope the production cuts will give OPEC+ control over oil prices and ensure enough oil revenue to protect their country from a recession. “They are aware that a cut will irritate Washington, but they are managing the market,” added Mr Cahill.