Saudi Arabia announced this Sunday that it will extend voluntary oil production cuts at least until the end of December 2024, a move that will surely cause higher gas prices in Washington.
This Sunday, Saudi Arabia announced that it would begin reducing its oil production by 1 million barrels per day in July to support the “stability and balance of oil markets”. The decision was announced on the sideline of an OPEC+ meeting in Vienna, but the extra cuts were in fact a unilateral decision made by the Kingdom.
Since Joe Biden put a foot in the White House as president of the United States in January 2021, relations between Saudi Arabia and the US have been experiencing unprecedented turmoil.
From ignoring Crown Prince Mohammed Bin Salman and dismissing direct talks with him, to threatening the Kingdom put it in a state of pariah for its human rights violations, Biden has been considerably hostile in his rhetoric regarding one of the closest allies of the US in the Middle East. In return, Saudi Arabia has also been quite responsive, not just in words but in actions, to punish the Biden administration.
Using the most powerful tool it has in possession, Saudi Arabia has, during recent months, put immense pressure on the US by cutting oil production and therefore, causing gas prices in the West, especially in the US, to dramatically increase,
Too late for Biden to eat a humble pie!
Unable to keep up with the bad language against Saudi Arabia, it was last summer that Biden traveled to the Kingdom to ask the country’s leaders to increase oil production. Instead, OPEC+ members, on top of them Saudi Arabia, announced in October a cut of 2 million barrels per day, a decision that pretty much resented the White House.
Reacting to the oil cartel OPEC’s (Organization of the Petroleum Exporting Countries) decision to cut production, the White House said U.S. President Joe Biden was “disappointed”, calling the decision “shortsighted”.
“At a time when maintaining a global supply of energy is of paramount importance, this decision will have the most negative impact on lower- and middle-income countries that are already reeling from elevated energy prices,” U.S. National Security Advisor Jake Sullivan and National Economic Council Director Brian Deese said in a statement back then.
In an effort to make up for the Saudis’ oil cut decision, and therefore to keep gas prices down at home, the Biden administration has been releasing millions of barrels of oil from the Strategic Petroleum Reserve since last year.
Thanks to Saudis, Americans should be expecting even higher gas prices
The last time when Saudi Arabia reduced its oil production in the framework of the OPEC, gas prices in the US raised so sharply that it caused several rounds of unrest in different cities of the country. It is therefore simple math that Sunday’s decision by the Kingdom to cut its oil production even more than the last time, Americans should be expecting another huge rise in gas prices.
Calling the new reduction a “lollipop,” Saudi Energy Minister Abdulaziz bin Salman said at a news conference on Sunday that “we wanted to ice the cake.” He said the cut could be extended and that the group “will do whatever is necessary to bring stability to this market.”
Good to mention that of the global oil production that ranges around 100 million barrels a day, Saudi Arabia now produces 9 million barrels, the country’s Ministry of Energy said. That’s 1.5 million fewer barrels per day than it was producing earlier this year.