Saudi Arabia keeps lid on oil output as gas prices in US soar

Saudi Arabia keeps lid on oil output as gas prices in US soar

Dubai: Saudi Arabia is signalling it isn't willing to pump more oil and won't push for changes to an agreement with Russia and other producers that has kept a lid on oil production levels.

This has Washington concerned as gasoline prices rise and tensions with Russia over Ukraine fuel market uncertainty.

The Biden administration dispatched Brett McGurk, the National Security Council's Middle East coordinator, and the State Department's energy envoy, Amos Hochstein, to Riyadh on Wednesday to talk about a range of issues chief among them the ongoing war in Yemen and global energy supplies.

Asked by reporters in Washington whether the US officials were also urging Saudi Arabia to pump more crude to alleviate high oil prices, White House press secretary Jen Psaki said she did not have more details on the meeting.

A White House official said the two US officials had not asked the Saudis to increase oil production at their meetings in Riyadh. The person insisted on anonymity to discuss the meetings and said the conversation involved regional issues and energy security impacts on the global economy.

Two Saudi officials told The Associated Press the Saudi energy minister informed the Organisation of the Petroleum Exporting Countries, or OPEC, of the kingdom's commitment to the group's current roadmap of cautious monthly increases. They spoke anonymously because they were not authorised to brief journalists.

King Salman also said as much in a call last week with President Joe Biden. According to a Saudi readout of the call, the king highlighted the the importance of maintaining the agreement" that is in place between OPEC, the oil cartel led by Saudi, and Russia.

The Saudi and Russian-led alliance, known as OPEC+, calls for gradual increases to oil production as the world continues to emerge from the pandemic, but geopolitical events have been rapidly evolving and driving market volatility.

Higher prices at the pump pose a threat to Democrats at the polls in upcoming midterm elections. Biden has warned that gas prices could rise even higher if Russian President Vladimir Putin invades Ukraine.

Benchmark crude is trading at around 95 a barrel, its highest level in eight years. AAA says the current US national average for a gallon of regular gasoline costs around 3.50 a 40% increase from its average of 2.50 at this time last year.

During a CNN forum in October, Biden said prices were rising because of the supply being withheld by OPEC". He said that while there's a lot of negotiation going on about the cost of gas, there's a lot of Middle Eastern folks who want to talk to me".

I'm not sure I'm going to talk to them. But the point is, it's about gas production, he added.

His remarks were widely interpreted as a swipe at Saudi Crown Prince Mohammed bin Salman, who oversees the kingdom's major policy decisions and day-to-day affairs.

Saudi Arabia has the ability to produce some 12 million barrels a day, but its output is around 10 million barrels a day in line with the OPEC+ curbs made during the coronavirus pandemic. The Biden administration has emphasised US strategic interests with Saudi Arabia, a departure from the Trump administration's personal relationship with the crown prince that was cultivated by advisor Jared Kushner.

Early on in his presidency, Biden reversed a terrorism designation of Yemen's Houthi rebels that a Saudi-led coalition is battling a decision he's now being lobbied to reconsider. He also declassified an intelligence report that concluded Prince Mohammed likely approved the operation that killed Saudi writer Jamal Khashoggi at the Saudi Consulate in Istanbul in 2018. Throughout his presidency, Biden has circumvented speaking directly with the crown prince, choosing instead to hold calls with King Salman, the prince's 86-year-old father.

The OPEC+ group has consistently rebuffed pressure from Biden to pump significantly more oil, deciding instead to stick with cautious monthly increases. The higher oil prices are a boon to the economies of both Saudi Arabia and Russia as Moscow faces possible Western sanctions over Ukraine.

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