Biden administration officials have spent more than a week talking to their counterparts in Middle Eastern oil-producing nations, seeking to downplay production cuts by OPEC Plus, the Saudi-led group. , in an effort to keep global oil prices from rising. drastically.
On Wednesday, OPEC Plus announced a production cut of two million barrels per day.
Engagement ahead of the last OPEC Plus meeting included outreach to senior officials from the State Department, Treasury Department, and National Security Council. Officials familiar with the calls say the efforts have not detracted from efforts by the administration over the past year to push oil producers to maintain high production levels after the invasion of Ukraine. by Russia, which shook world markets.
“We are still talking to all producers and consumers, including OPEC Plus partners,” said National Security Council spokeswoman Adrienne Watson. “This has been the case for decades and in every bipartisan administration, including this one. We have been clear that energy supply must meet demand to support economic growth and lower prices for consumers around the world, and we will continue to discuss this with our partners.
Administration officials reminded their counterparts that the United States plans to boost global oil demand in the near future by purchasing oil at fixed prices to fill the country’s strategic petroleum reserve. Mr Biden began releasing a million barrels a day from the reserve in March in a bid to boost oil supply and limit prices. Karine Jean-Pierre, the White House press secretary, told reporters this week that the administration has no plans to continue the releases past the end of the month, when the effort is due to expire. .
Filling the reserve could eventually help stabilize oil demand and boost revenues for major oil-producing nations. The Department of Energy proposed a regulation this summer that would allow the government to enter into contracts to fill the reserve at fixed prices in the future. The effort could help boost oil production, administration officials say, as it would give oil producers confidence that they will be able to sell crude at a fixed rate even if global oil prices rise. drop again.
The talks — and the decisions of global oil producers — come at a fragile time for global oil markets and for Mr. Biden’s domestic political calculations. After falling during the summer, world crude prices have started to climb again. So did gasoline prices in the United States, dampening what had been a favorite Mr. Biden bragging point in recent months.
But as central banks around the world are aggressively raising interest rates to stifle high inflation, fears of a global recession are mounting. This could sap demand for oil and depress prices, which will hurt big oil producers. Conversely, prices could skyrocket at the end of the year if a new round of European sanctions knock millions of barrels of Russian oil off the world market every day – which is why administration officials and their allies pushed an untested plan to allow Russian oil to continue to flow into the market, but only be sold at a discount.