Verbal spat over oil production cuts - GulfToday

Verbal spat over oil production cuts


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In a surprisingly strong statement on Thursday, Saudi Arabia foreign ministry issued a statement refuting the White House statement saying that US President Joe Biden has called the OPEC + decision to cut oil production by two million barrels per day as “short-sighted” and a veiled threat that there will be consequences. The Saudi foreign ministry on Thursday said, “The Kingdom clarified through its continuous consultation with the US Administration that all economic analyses indicate that postponing the OPEC + decision for a month, according to what has been suggested, would have had negative economic consequences.”

But the Saudi Arab foreign ministry also said that Saudi Arabia-US relations were in no way affected by this spat over cut in oil production. The ministry’s statement said, “The Kingdom affirms that it views its relationship with the US as a strategic one that serves the common interest of both the countries.”

In an interview with the American television news channel, CNN, Saudi Arabia’s Minister of State for Foreign Affairs asserted that there was no political motive behind the OPEC + decision. He said, “Saudi Arabia does not politicise oil. We don’t see oil as a weapon. We see oil as our commodity.

Our objective is to bring stability to the oil market. And our record is very clear on this not over the past few weeks but over the past decades.” He ruled out that the differences over the oil issue would affect bilateral relations. He said that Saudi Arabia and the US have “permanent interests” in fighting extremism and terrorism. He clarified, “I don’t believe this relationship is broken, very far from it, this relationship is very robust. We have almost 80,000 Americans living and working in Saudi Arabia, we have a very strong trade and investment relationship.”

The American response to the OPEC + decision has been hasty and aggressive. White House spokesperson Karine-Jean Pierre said on Air Force One last week, “Look it’s clear that OPEC Plus is aligning with Russia with today’s (October 5) announcement.” National Security adviser Jake Sullivan and National Economic Council director Brian Deese said in a statement on October 5: “The President is disappointed by the short-sighted decision by OPEC + to cut production quotas while the global economy is dealing with the continued impact of (Russian President Vladimir) Putin’s invasion of Ukraine.”

While the Americans view the OPEC + decision through political lens, the OPEC + had clarified tme and again that the decision to cut oil production was made for economic reasons, to keep the supplies and global prices on an even keel. But the American political establishment is not able to see the issue beyond the context of the war in Ukraine. The American attitude is not a helpful one but it is expected that given the long-term strong bonds between Saudi Arabia and the US the differences over oil production will get sorted out.

The Americans have two policy goals wih regard to oil production. They do not want Russia to benefit from buoyancy in oil prices despite the West’s economic sanctions against Russia. Second, they want to help Europe to tide over the oil and gas shortage caused by the economic sanctions by seeking the help of the oil-producing Gulf Arab countries to supply gas and oil to Europe.

But the OPEC + was more concerned about the lack of demand in global oil markets in the face of possible recession, and it had to take corrective action. Though Gulf Arab countries maintain friendly relations with Russia, it is the US which remains the strategic partner for the region.

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