The U.S. government has limited options in dealing with rising oil prices. Previously, it blamed Russia and Saudi Arabia for this. Moscow has made no secret of its hopes for higher prices, while Riyadh has denied it deliberately hurt the United States by cutting production.
Following the decision to cut production and raise oil prices, many U.S. officials have called for a re-examination of relations with Riyadh. They also say it has chosen to gain temporary narrow interests in order to draw closer ties with Russia.
White House setback
A few days ago, OPEC+ announced that it would reduce oil production by 2 million barrels per day, or about 2% of global demand. American politicians believe that this decision is not only a “slap” by Saudi Arabia to the Biden administration, but also a “victory” for Russian President Vladimir Putin. Because the country wants to raise oil prices to continue funding the war in Ukraine.
The Wall Street Journal reported on Tuesday, October 11, that Riyadh refused to respond to a U.S. request to delay its decision to cut production for another month.
The Saudi rejection represents a setback for the White House. Previously, the White House highly relied on Biden’s visit to Saudi Arabia in July 2021 as a new and mature starting point for the strategic relationship between the two countries.
The matter comes at a time when President Biden wants to keep auto fuel prices low ahead of the Nov. 8 midterm elections, especially at a time when Democrats are increasingly likely to lose support in the House and, to some extent, the Senate. .
On Tuesday, the White House announced that the U.S. president had reassessed relations with Saudi Arabia following his decision to reduce oil production. It’s no surprise then.
Giorgio Cafiero, chief executive of the Gulf States Analysis firm, said he was concerned that Washington would repeat the same mistakes in its view of today’s issues.
He tweeted, “My concern is that we are repeating the mistakes of the Cold War era, pushing every country into the pro-West or pro-Moscow camp. Like when we mistook Mohammad Mossadegh (mid 50s) Minister of Iran) and (Jamal) Abdul Nasser were pawns of the Soviet Union. Many believed that the Arab countries that cooperated with Moscow were part of the pro-Russian anti-American camp! But in reality, the situation is much more complicated. “
Political interests or fiscal accounts?
U.S. experts are divided on the motivation behind Riyadh’s production cuts. Some believe the aim is to seek purely economic gain, while others believe the decision may be linked to damaging the Democratic administration and the hopes of a President Biden.
“My concern is that when gas prices go down, presidents typically don’t benefit from it, but when auto fuel prices go up, they pay the price,” Larry Sabato, director of the Center for Politics at the University of Virginia, told CNN. And the higher the price, the more severe the penalty. Elections are complex, voting patterns are extremely complex. And you can’t just look at that as one thing.”
time is a big issue
As for Dave DesRoches, a professor of security studies at the National Defense University and a former U.S. military official, he said: “The Saudi decision to cut production along with Russia and OPEC, which Democrats see as a note to the U.S. government A slap in the face. It reflects the Saudis’ great desire to limit President Biden’s power and paralyze his government.”
Deroche argues that the timing of this recent incident and its close ties to Russia’s war with Ukraine “make this a very big issue. As a result, support for Ukraine against the Russians has broad bipartisan support in Washington. In this case, many believe that Saudi support for high oil prices is support for Putin’s war in Ukraine. “This is not a situation that Saudi Arabia wants, because it will damage its reputation for a while.” “
American suffering and the upcoming election
Deroche emphasized, “In conclusion, energy prices, especially gasoline prices in the United States, are a very emotional issue for Washington. There is also the upcoming midterm elections, where President Biden’s party is expected to lose seats and Control at least one House of Congress.”
The ruling party, Biden’s Democratic Party, is often blamed for the economy’s troubles. Because inflation has soared to record highs under Biden.
President Biden’s attitude is mixed, especially after he withdrew more than 200 million barrels from the Strategic Petroleum Reserve in previous months, a figure that accounts for one-third of the 600 million barrels in the U.S. oil reserves. It previously took the United States three years to fill the reserve gap.
Biden’s real dilemma
Saudi Arabia has already backed the decision to cut production, so those who advocate restoring relations between the two countries are being questioned. At the same time, the United States has few other options for increasing global oil supplies.
One of Washington’s options, Deroche said, is to drop various restrictions on U.S. domestic production. However, this would be opposed by a significant portion of Biden’s party and would not have any impact on pre-election prices. Biden has previously withdrawn the U.S. Strategic Petroleum Reserve and can no longer do so because it needs to be replenished.
Biden also has the option of reaching out to oil producers isolated by U.S. sanctions, particularly Venezuela. For Biden, however, this is politically problematic.
De Roche noted that Biden may seek to force Saudi Arabia to produce more oil by halting sales of key weapons such as the Patriot missile defense system. But he warned that “such behavior would be viewed as a very dangerous game that would undermine America’s credibility as a global supplier of weapons and defense systems.”
On the other hand, Aaron David Miller, a former State Department official who is now an expert at the Carnegie Endowment for International Peace, tweeted, “The U.S. government believes that the U.S. relationship with Saudi Arabia is too large to Failed, and very important. The U.S. has enormous leverage with Saudi Arabia in the security space. But if it’s based on the past, it’s unlikely to use that leverage. That’s a real dilemma for Biden.”
So Biden has very few options. His only option in the near term (before the election) seems to be to blame Putin’s war on Russia for inflation and try to divert voters’ attention to other issues, like an abortion bill.
This approach may work, but the more the American public looks at energy supply and prices, the more clearly it becomes apparent that Biden will not be able to address this important concern of American voters in the short term.