In a surprising decision for Washington, Saudi Arabia announced this Tuesday that it is going to decrease oil prices for Asian and European buyers and yet increase it for American customers.
Just two months after the US President Joe Biden visited Riyadh and begged for more oil amid Russia-Ukraine war, Saudi Arabia is adapting policies that are totally against Washington’s wish.
It was on this Tuesday that the Kingdom announced it is lowering the price of its premier crude for buyers in Asia and Europe, while hiking the prices for American customers.
According to a statement issued by the Saudi Aramco company, it is “reducing prices by $4 a barrel for Asian refineries and by $2 for European customers beginning from next month,” but it is “raising prices by $0.50 for most US buyers.”
Although such a price cut was expected as the price of Brent crude oil has fallen in recent months, that US buyers will have to pay more for Saudi oil was shocking news, especially for Biden himself.
But that’s only the tip of the iceberg. A day earlier on Monday, member countries of the OPEC+ agreed to a small cut in oil production.
The group said in a statement in this regard that it would cut production for October by 100,000 barrels per day. Less than a day after the OPEC+ output cut announcement; Oil prices slipped Tuesday amid recession fears. Brent crude fell 3.2% to $96.22 a barrel, and West Texas Intermediate dipped 0.2% to $86.69 a barrel. The cut in output is equal to 0.1 per cent of global supply. It effectively reverses an increase in supply by a similar amount last month.
OPEC+ is a combination of 13 members of the Organization of the Petroleum Exporting Countries (OPEC) and an informal group of non-OPEC members led by Russia. Currently, the Organization comprises 15 Member Countries – namely Algeria, Angola, Congo, Ecuador, Equatorial Guinea, Gabon, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, United Arab Emirates and Venezuela.
Member countries accounted for an estimated 44% of global oil production and 81.5% of the world’s ‘proven’ oil reserves.
Biden’s trip to the Kingdom, now safe to be called fruitless
It was in this past July that US President Joe Biden pushed Saudi Arabia — OPEC’s largest producer — to boost oil production during his visit to the Kingdom.
The aim was to decrease oil prices inside the US which had reached unprecedented numbers due to the Russia-Ukraine war and the following sanctions against Russia’s energy market. The kingdom, however, declined to significantly boost production.
And now, the OPEC+ oil production cut as well as rising the oil price for American buyers only could ruing Biden’s efforts to help Democrats hold onto Congress in the upcoming elections this November. It also proved very well that the strength of the West’s united front against Russia could be blown up by Saudi Arabia, a country Biden has longed criticized and even vowed to make it the world’s pariah.
Iran can fill the energy gap
Amid US-Saudi Arabia tensions over oil production and oil prices, Iran announced this week that it is ready to make up the vacuum in the oil market and supply oil to Europe if sanctions imposed on it over its nuclear program be lifted.
“We hope an agreement will be reached to let Iran play a more efficient role, with the aim of providing the energy needed for countries around the world and for European countries.” Iran’s Foreign Ministry spokesman Nasser Kanani said this Monday.
Good to mention that after Russia, Iran has the world’s second largest natural gas reserves. However, and due to sanctions, it is mostly out of the global energy market and can’t export its oil and gas.