The United States does not expect Saudi Arabia to boost oil production immediately to facilitate the soaring inflation that hits Americans in the pocket.
Instead, it is eyeing the outcome of the next OPEC+ meeting on Aug. 3, a US official said today.
The comments come hours before the US President Joe Biden is scheduled to land in Jeddah on a voyage designed to reshape America’s relationship with the kingdom and focus on energy, human rights and security cooperation with Saudi Crown Prince Mohammed Bin Salman.
High demand for gas, driven in large part by the global economic recovery from the Covid pandemic and Russia invasion of Ukraine Tightening supply has contributed to rampant inflation.
Saudi Arabia, alongside the United Arab Emirates, holds most of the spare capacity within the OPEC+ group, an alliance between the Organization of Petroleum Exporting Countries (OPEC) and other exporters, particularly Russia.
Biden is expected to have face-to-face meetings with heads of state from Saudi Arabia and the United Arab Emirates during his trip.
But the Kingdom has repeatedly indicated that it would not act unilaterally. Brent crude prices are trading near $100 a barrel after hitting a 14-year high of $139.13 in March as investors weigh new COVID-19 lockdowns in top importer China and recession fears.
Biden is scheduled to fly to Saudi Arabia, where he is expected to hold face-to-face meetings with leaders of Saudi Arabia and the United Arab Emirates on increasing oil production during his trip
Saudi Arabia, alongside the UAE, holds most of the spare capacity within the OPEC+ group, but de facto ruler Mohammed Bin Salman (pictured) is unlikely to increase production immediately
The OPEC+ group is an alliance between the Organization of Petroleum Exporting Countries (OPEC) and other exporters, most notably Russia
“Saudi Arabia prefers to manage the market through the Organization of Petroleum Exporting Countries and Allied Producers (OPEC+), rather than through unilateral action,” Ben Cahill, a senior fellow at the Center for Strategic and International Studies, wrote in a recent analyst note.
“Saudi Energy Minister Abdulaziz bin Salman has consistently emphasized the importance of OPEC+ cohesion, including a central role for Russia,” he said.
UAE President Sheikh Mohammed bin Zayed wants a more stable oil market, his adviser said
Anwar Gargash, diplomatic adviser to UAE President Sheikh Mohammed bin Zayed, also said on Friday his country wants a more stable oil market and will abide by OPEC+ decisions.
“The UAE is very much in favor of supporting and following the US talks with Saudi Arabia on oil because we are part of the larger OPEC group OPEC+, so we would very much like to see more stability in the market and the ability to do more to produce, and that’s what we’re going to follow, where the group will follow,’ he said.
The US is eager for Saudi Arabia and its OPEC partners to pump more oil to help bring down high gasoline costs and mitigate the highest US inflation in four decades.
However, spare capacity within OPEC is running low as most producers are pumping at maximum capacity.
It’s unclear how much additional Saudi Arabia could bring to market and how quickly.
Biden recently said he would not directly ask Saudi leaders to increase oil production.
Instead, he will continue to argue that all Gulf states should increase oil production, he said.
OPEC+ decided last month to raise production targets by 648,000 barrels per day (bpd) in August, ending record production cuts it implemented at the height of the pandemic to counter collapsing demand.
The United States is experiencing one of the highest inflation rates below developed countries, with the federal government reporting on Tuesday that inflation rose to a 41-year high of 9.1 percent last month.
That consumer price indexa broad measure of goods and services across the nation, rose over 8.8 percent Dow Jones Estimate where Moody’s Analytics senior economist Ryan Sweet calculated that the average American family spent an additional $493 in the last month, according to the New York Post.
president Joe Biden has tried to reassure Americans that the United States is “in a stronger position than anyone else in the world to overcome this inflation.”
But the US is now on par with Britain, where government officials reported that inflation rose 9.1 percent in June – the highest in four decades – on rising energy, fuel and grain costs amid the war in Ukraine stops.
Gas and electricity prices in the country rose 53.5 and 95.5 percent year-on-year, respectively BBC reports.
