Biden Administration Pushes Oil Producers to Keep Production High

0


Biden administration officials have spent more than a week in discussions with their counterparts from oil-producing countries in the Middle East, seeking to minimize production cuts by OPEC Plus, the group led by Saudi Arabia, in an effort to keep global oil prices from rising drastically.

On Wednesday, OPEC Plus announced a production cut of two million barrels a day.

The engagement ahead of the latest meeting of OPEC Plus included outreach by top officials from the State Department, Treasury Department and the National Security Council. Officials familiar with the calls say the efforts have not been a departure from the administration’s efforts over the past year to push oil producers to keep production levels high after Russia’s invasion of Ukraine, which has roiled global markets.

“We are always talking to all producers and consumers, including OPEC Plus partners,” said Adrienne Watson, a spokeswoman for the National Security Council. “That’s been the case for decades and across bipartisan administrations, including this one. We’ve been clear that energy supply should meet demand to support economic growth and lower prices for consumers around the world, and we will continue to talk with our partners about that.”

The administration officials have been reminding their counterparts that the United States plans to boost global oil demand in the near future by purchasing oil at fixed prices in order to refill the nation’s Strategic Petroleum Reserve. Mr. Biden began releasing one million barrels per day from the reserve in March in an effort to boost oil supplies and limit prices. Karine Jean-Pierre, the White House press secretary, told reporters this week that the administration had no plans to continue the releases after the end of the month, when the effort is scheduled to expire.

Refilling the reserve could eventually help stabilize oil demand and pad revenues for large oil-producing countries. The Energy Department proposed a regulation this summer that would allow the government to enter contracts to refill the reserve at fixed prices in the future. That effort could help boost oil production, administration officials say, because it would give oil producers reassurance that they will be able to sell crude at a set rate even if global oil prices dip again.

The discussions — and the decisions by global oil producers — come at a fragile time for global oil markets and for Mr. Biden’s domestic political calculations. After falling through the summer, global crude prices have begun to tick up again. So have gasoline prices across the United States, dampening what had been a favorite bragging point for Mr. Biden in recent months.

But as central banks around the world raise interest rates aggressively to choke off high inflation, fears of a global recession are mounting. That could sap oil demand and send prices plunging, hurting large oil producers. Conversely, prices could soar at year’s end if a new round of European sanctions knocks millions of barrels of Russian oil off the global market each day — which is why administration officials and their allies have pushed an untested plan to allow Russian oil to continue to flow to the market, but only be sold at a reduced price.

Leave a Reply

%d bloggers like this: