The strain of ties between Riyadh and the Washington intensifies by a decision to exclude IEA data at OPEC+ meeting.
Saudi Arabia’s declared that OPEC+ should no longer use oil figures from the Western energy regulator. According to those familiar with the case, the new policy mirrored concerns about US manipulation on the figures. It might also put further strain on Riyadh-Washington relations.
OPEC+, the Organization of Petroleum Exporting Countries and its allies, including Russia, has so far refused to boost supply in response to Western demands. The calls intended to cut the price of oil, which are currently hovering around $100 per barrel.
The situation is sensitive since high oil prices have fueled inflation in the US, owing to Moscow’s offensive against Ukraine. United States President Joe Biden is under pressure to cut record-high fuel prices ahead of mid-term election later this year.
Saudi Arabia and its allies’ interest in helping the Washington has diminished during the recent months. It’s partly due to Washington’s failing to acknowledge their reservations about Tehran during the nuclear negotiations. Washington has also halted backing for Saudi alliance in Yemen and placed restrictions on US arms sales to Arab nations.
Furthermore, Biden has avoided interacting openly with Mohammed bin Salman, the country’s de facto ruler. In light of these developments, an OPEC+ technical meeting concluded with a consensus resolution to exclude the International Energy Agency’s data from assessments of the oil market’s situation.
OPEC+ may always select whatever figures it chooses from six non-OPEC agencies, thus the move bears political overtones. When formulating its opinion of the oil market’s output and consumption ratio, the enterprise consults a variety of sources.
The fact that OPEC+ formally withdrew the data suggests a growing sense of dissatisfaction among its members. The IEA’s prejudice towards its largest partner, the United States, was addressed by OPEC+.
The experts specifically mentioned the IEA’s large upward adjustment in rare demand two months ago. Furthermore, the new strategy shows the agency’s assessment of the amount of Russian petroleum’s removal from the global market.
The energy authorities of Riyadh and Abu Dhabi avoided commenting on the issue. An insider went so far as to characterize the condition a cold war, accusing IEA with igniting the crisis.
“The IEA strives to provide an unbiased and independent view of oil market fundamentals and political considerations have never been a factor in how the agency assesses the market outlook,” IEA responded.
The IEA study, released ahead of the UN climate negotiations, proved a turning point for Riyadh and its regional allies. The research indicated that fresh hydrocarbon projects impedes reaching the goal of net zero emissions in three decades.
This has fueled OPEC+ concerns that the IEA was underestimating the level of long-term demand. Furthermore, when the IEA requested more oil to drop prices to accommodate the United States, OPEC+ resisted since it believed the marketplace was properly supplied.
OPEC+ must keep political reservations out of its assessments, according to Saudi Arabian leaders. The OPEC+ agreed to a previously scheduled moderate monthly rise at a meeting at late last month.
US president believes that lowering costs will need a significant increase in production. The new move takes more significance when considering that Riyadh would have a different behavior during a normal state of ties with Washington. Riyadh is responding politically biased assessments by IEA by politically biased policies against Washington. Moscow will be the first to benefit the challenge.