U.S. officials have been secretly asking Saudi Arabia and its OPEC allies to reverse their decision to cut oil production ahead of the recent OPEC+ summit, but they have responded with a resounding no. The United States offered to postpone the decision for at least a month in order to reduce the risks of a new round of rising gasoline prices ahead of the November midterm elections to Congress. This is reported by The Wall Street Journal, citing sources from both sides.
The "decisive rejection" by Saudi Arabia and other OPEC members was taken too painfully by the US administration. The White House interpreted this decision as support for Russia, which, in the face of Western sanctions, a partial oil embargo and the imminent introduction of an oil price ceiling, is extremely benefiting from the cartel's production cuts. Riyadh denies the allegation that this was Russian help and insists that such a decision was dictated solely by economic considerations in the interests of the kingdom.
However, the publication's sources close to other OPEC members claim that the representatives of Saudi Arabia are cunning: they really were under pressure from the Russian side, which lobbied for a higher production cut. The publication notes that initially the market and the American establishment expected a reduction in production by 1 million barrels, but Russia was able to convince to double the reduction, which surprised the market and infuriated the White House.
US officials deny that requests not to cut production, or at least postpone it by a month, are connected with the upcoming congressional elections. They say the OPEC+ decision is counterintuitive from a global economic point of view: it could increase inflationary pressures and lead to more severe recessions around the world. Similar arguments were addressed to the Saudis by their OPEC partners, suggesting not to make sudden moves and reduce production not so much, but in the end they obeyed the will of the two leaders of OPEC + – Riyadh and Moscow, in order to maintain a unity of position within the cartel.
The publication assigns a special role in the OPEC + decision to the Crown Prince of Saudi Arabia, Mohammed bin Salman. The prince was dissatisfied with the visit of the American president in the summer, after which the parties verbally agreed to increase oil production in August by 500,000 barrels per day under OPEC+. However, in reality, the cartel agreed on an increase of only 100,000, which created additional tension in relations between the countries. Moreover, already in September this decision was canceled, and the American administration regarded this as an unfriendly gesture.
The publication claims that after the August increase in production, the American side sent a letter to the prince stating that he did not keep his word to increase production. This angered Prince Salman and he decided to change the vector in relations with the United States, sources say.
Mutual dissatisfaction can lead to a radical revision of diplomatic relations between countries. Representatives of the American establishment are already seriously talking about the withdrawal of the American military contingent from the region, as well as stopping the supply of weapons to the kingdom. Moreover, the congressmen intend to lobby for an "anti-OPEC" bill that would allow the American legal system to sue the cartel, which, in their opinion, is guilty of price fixing.