The Saudi crown prince and Russian Deputy Prime Minister allegedly aim to lower oil production in a bid to annoy U.S. politicians.
Key Details
- On Sunday, Saudi-Arabian energy minister Prince Abdulaziz bin Salman al-Saud announced that his country would cut oil production by roughly 10% starting in July.
- The prince declared the measure was designed to boost oil prices and that “this market needs stabilization.”
- The move is speculated to be a political move to snub American interests and show support to Saudi Arabia’s allies in Russia by frustrating the U.S. oil market.
- Russian Deputy Prime Minister Alexander Novak subsequently announced that Russia would continue with production cuts of 1.4 million daily oil barrels next year.
- Crude oil prices have decreased by 32.1% from their high in July 2022 and have globally decreased in recent weeks to $71.85 per barrel.
Why It’s Important
The oil supply from Russia and the Middle East has remained a notable issue since the onset of the Russian invasion of Ukraine. Russia’s supply of oil and gas traveling into Europe was diminished due to pipeline maintenance, which sparked last year’s European energy crisis. Shortages similarly led President Joe Biden to tap into the nation’s strategic oil reserve in an effort to reduce gas prices after the national average peaked at $5.02 per gallon in June 2022.
Saudi Arabia’s most recent move may be a politically calculated one. The Organization of the Petroleum Exporting Countries (OPEC) has faced repeated criticism from Western nations for allegedly manipulating oil prices and raising energy costs, which they argue is done to undermine Western nations and assist its allies in Russia, Reuters notes.
President Biden has repeatedly pressured OPEC to avoid making cuts over fears that another spike in oil prices could spark additional inflation and recessionary stressors. U.S. Secretary of State Anthony Blinken is scheduled to visit Saudi Arabia next week and will likely discuss the matter with Saudi policymakers. The New York Times is speculating that the cuts could be purposeful to allow Russia to boost oil production and profits amid its ongoing war effort. This could further enflame tensions between the U.S. and OPEC, Business Insider notes.
