Better Putin than Westerners !
The decision by OPEC+ to cut its oil production, while the United States and France demanded an increase, underlines the solidity of the ties forged between Saudi Arabia, leader of the cartel, and Russia.
At the end of September and following the G7, the European Union announced what it believed to be one of the most effective weapons to dry up Moscow's warlike finances while fighting its own energy crisis: a cap on the price of oil. .
A few weeks later it was all over for the West, which saw its plan seriously undermined.
The thirteen members of the Organization of the Petroleum Exporting Countries, led by Saudi Arabia, and their ten partners led by Russia decided this Wednesday, October 5, 2022 on a drop of “two million” barrels per day for the month of November. This drastic cut could cause crude prices to soar to the benefit of producing countries, including Russia, which needs hydrocarbon sales to finance its invasion of Ukraine.
A slap from the Saudi Prince MBS to his Western allies
It is a real slap in the face given by the strongman of Saudi Arabia, Crown Prince Mohammed Ben Salman, to his Western allies. In recent months, Joe Biden and Emmanuel Macron had reconnected with MBS – at the risk of being accused of rehabilitating the one whom the CIA considers responsible for the assassination of the Saudi dissident Jamal Khashoggi. The two leaders are today rejected in their demands.
A few weeks before the inevitably crucial midterm elections, the Biden administration is of course furious: fighting at home against galloping inflation – led in particular by energy prices – it has long pressured its allies within OPEC, starting with Saudi Arabia, so that they do not reduce their production in this way.
Alignment with Russia against “fist bump”
The decision of OPEC + falls to the worst for Joe Biden. In a press release, he said he was "disappointed with the short-sighted decision" of the cartel of black gold producing and exporting countries. “It is clear that with its decision today, OPEC + is aligned with Russia”, then declared, in hardening the tone, its spokeswoman Karine Jean-Pierre.
She thus accuses Mohammed bin Salman, Prime Minister in office, of aligning himself with Russia. It is the entire policy of the Biden administration in the Gulf that is called into question, after a summer visit with meager results that some had described as “humiliating” for the United States. The American president had traveled to Jeddah, Saudi Arabia, in July for an official visit which notably saw him exchange a "fist bump", a familiar greeting fist to fist, with Crown Prince MBS, and participate in a summit. with many Arab leaders... But with this decision on Wednesday, the Saudis made it clear that they didn't care about their relationship with Biden.
Strategic reserves
The 79-year-old Democrat knows that a rise in gas prices a month before the midterm legislative elections would undermine the chances of his party, which so far hopes to retain control of at least one of the two chambers. of Congress, the Senate.
Faced with this economic and electoral risk, the White House is already sketching out its response. In particular, it will “put on the market next month ten million barrels taken from the strategic oil reserves”.
The US executive had already decided in March to use these black gold reserves for several months, now at their lowest since July 1984.
But "the United States cannot forever draw on strategic reserves (...) and OPEC knows it", observes analyst Andy Lipow (Lipow Oil Associates), for whom the solution would be "to produce more oil" on American soil.
This is why Joe Biden also wants to think about the best way to “reduce OPEC+ control over energy prices”, according to the long press release from the White House.
And what about the European Union ?
But the expert points out that "this would penalize the European and Asian allies"...
As usual, the European Union is taken by surprise and may well share its ire. By thus increasing the price of crude, the decision of the oil cartel puts an end to its plan to cap the price of oil. "We are determined to make the Kremlin pay the price of this new escalation", declared Wednesday September 28 the controversial president of the Ursula von der Leyen Commission with an eighth set of sanctions.
However, this cut in world production risks costing Europe and the United States dearly and helping to fill the Kremlin's coffers.
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