Biden administration frets over oil, seeks intervention from Saudi Prince ahead of OPEC meeting
The price of oil and other commodities have surged in recent months, threatening to undermine the US Federal Reserve’s steadfast view that this year’s inflation spike is transitory.
So with Joe Biden’s national security advisor, Jake Sullivan, in Saudi Arabia to discuss conflict in Yemen, it’s no surprise oil has also been on the agenda.
Approximately 17 percent of the world’s proven petroleum reserves are under Saudi control and it is arguably the most influential member nation of the OPEC alliance.
Journalists, have been prodding the white days for days on whether the price of oil has been on the agenda during discussions between Sullivan and Saudi Crown Prince Mohammed bin Salman.
This was an exchange between a journalist and White House press secretary Jen Psaki at a press briefing on Tuesday (September 28):
JOURNALIST: Thank you, Jen. A quick question on the energy crisis. Oil prices have reached $80 a barrel — first time in three years. There is an energy crisis underway. China, UK, Europe — we understand, from the White House, that you’re monitoring the situation. But what in the near term is the White House doing to ease pressure on the market? Are you — are there any conversations that you are having with OPEC or you’re planning to have with OPEC that you can tell us a little bit more about?
And we also know that Jake Sullivan is in Saudi. He’s planning to meet with MBS, although that is about Yemen. Does he plan to bring this up during that meeting?
JEN PSAKI: Well, we are in — we continue to speak to international partners, including OPEC, on the importance of competitive markets and setting prices and doing more to support the recovery.
We’re obviously monitoring, as you’ve already alluded to. And I would note that, last month, our NEC Director, Brian Deese, also sent a letter to FTC (Federal Trade Commision) Chair Lina Khan, asking the FTC to use all of its available tools to monitor the U.S. gasoline market and address any illegal conduct that might be contributing to price increases. The FTC responded, committing to take specific actions to identify, deter, and investigate.
We also noted — I’d also note that Jake Sullivan also put out a statement at the time, which you referred to. The engagements he has in the Middle East and with the Saudis that — specifically the meetings with the Saudis — are really focused on Yemen. Our Yemen — our envoy is participating in a part of those conversations. That’s really the focus. So I don’t have a further readout beyond that at this point about how the conversations have gone.
Obviously, our national security advisor has been deeply engaged, but that’s not the focus or the purpose of his trip.
JOURNALIST: And, specifically in terms of sort of regulatory action from the FTC, that is obviously going to take some time, but the pressure on the market is building up right now. I mean, are there perhaps any, again, conversations on, you know, reaching out to the emergency stockpile to, you know, ease some pressure on the market? Is there anything being done in the near term?
JEN PSAKI: I don’t have anything in the near term to preview for you. Obviously, that’s up to the FTC, in terms of their timeline. But I would assure you we’re not only engaged with OPEC, we’re looking at every means we have to lower gas prices. But I don’t have — or address the cost of oil, I should say. But I don’t have anything else to preview for you.
Today, however, the White House confirmed the issue of surging oil prices and the impact this could have on the post-COVID global economic recovery (and inflation) was discussed in meetings involving Sullivan and Crown Prince Mohammed bin Salman.
“The national security adviser and his team reiterated the imperative of creating conditions to support global economic recovery in his meetings earlier this week,” a White House spokesperson told Reuters.
“The United States continues to speak to international partners, including OPEC, on the importance of competitive markets in setting prices and doing more to support the recovery.”
The discussions were no doubt aimed an influencing the Saudis ahead of a meeting involving OPEC and its allies, including Russia (OPEC+), next week.
It’s anticipated the oil producing nations will consider boosting supply above the 400,000 barrels per days additional output that is planned to begin within weeks.
However, many oil industry observers believe Sullivan’s attempts may in vein and OPEC and its allies will stick to the 400,000 barrels per day plan, which is unlikely to have any material impact on global oil prices in the foreseeable future – or have any impact of stemming so-called transitory inflation in the US.