OPEC+ Oil Cut Came at ‘Worst Possible Moment’: US Official

Saudi Arabia's Minister of Energy, Prince Abdulaziz bin Salman Al-Saud, and Russia's Energy Minister, Alexander Novak, are seen at the beginning of an OPEC and Non-OPEC meeting in Vienna, Austria on Dec. 6, 2019. Leonhard Foeger/Reuters

The recent move by OPEC+ to decrease oil output came at the “worst possible moment” and will have “wide-ranging” impacts, according to a U.S. official.

On Oct. 5, OPEC+, an alliance of oil-producing nations led by Saudi Arabia and Russia, reduced their oil output target for November by 2 million barrels per day. During her visit to the Middle East, Barbara Leaf, assistant secretary of state for Near Eastern Affairs, said to reporters that the OPEC+ oil cuts come as the world is only emerging from the COVID-19 pandemic and is also dealing with the consequences of Russia’s war against Ukraine, according to Bloomberg.

Despite the decision by the oil cartel, and subsequent criticism leveled against Saudi Arabia, Leaf insisted that the Middle East nation remains a strong ally of Washington.

The Biden administration would take a “methodical” approach to deal with Riyadh, she said. “Nobody has suggested an escalation … I will undoubtedly go to Saudi Arabia at some point, just not on this visit.”

OPEC+ members have publicly stated that the decision to reduce output was a unanimous one. However, Washington has accused Saudi Arabia of engineering the output reduction for political reasons, and pointed out that the organization’s decision would end up boosting Russia’s foreign earnings.

Last week, U.S. National Security Council spokesman John Kirby said that “more than one” member from OPEC had felt coerced by Saudi Arabia into casting the vote in support of the oil cut, according to Reuters. The OPEC+ decision would blunt the sanctions imposed on Russia for its invasion of Ukraine, he added.

Political and Economic Consequences

A group of congressional Democrats is seeking to take back U.S. missile systems and other armaments in Saudi Arabia as a retaliatory measure to punish the Middle Eastern nation.

In a statement, Sen. Chris Murphy (D-Conn.) asked that the Patriot missile defense batteries set up in Saudi Arabia to defend the oil infrastructure be rerouted and sent to Ukraine.

Meanwhile, Rep. Tom Tiffany (R-Wis.) called for an investigation into a claim made by a Saudi official that the Biden administration had asked them to delay the OPEC+ decision to cut oil output until after the November midterm elections.

“These are very serious allegations, and if the Biden administration did, in fact, attempt to coordinate with a foreign government to influence the U.S. election, that’s something the American people deserve to know,” Tiffany said in a statement.

The International Energy Agency warned in an Oct. 13 report that the OPEC+ decision will increase market volatility and might push the world into recession.

“With unrelenting inflationary pressures and interest-rate hikes taking their toll, higher oil prices may prove the tipping point for a global economy already on the brink of recession,” the agency said.