When OPEC+ recently decided to slash output by 2 million barrels per day, US President Joe Biden clearly expressed his anger at Saudi Arabia, a core member of OPEC, for lending a deaf ear to its pleas. Biden said in an interview with CNN on Tuesday that there would be “consequences” although he did not go into further detail as to what those consequences might be.
The Biden administration sees the kingdom’s move to cut oil production as a blatant display of siding with Russia.
Sen. Bob Menendez, D-N.J., chairman of the Senate Foreign Relations Committee, demanded that the US immediately halt all cooperation with Saudi Arabia — including weapons sales.
“The United States must immediately freeze all aspects of our cooperation with Saudi Arabia, including any arms sales and security cooperation beyond what is absolutely necessary to defend U.S. personnel and interests,” Menendez said in a statement.
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Another option that US is considering is the NOPEC bill, which stands for No Oil Producing and Exporting Cartels. This would classify OPEC as a cartel and subject its members to antitrust legislation.
Something long discussed by lawmakers, the bill passed a Senate committee in early May but is yet to be signed into law. According to US, NOPEC could expose OPEC countries and partners to lawsuits for coordinating supply cuts that raise global crude prices.
Although both courses of action could send a clear message, analysts said they could backfire for both the US and for crude prices.
Saudi Arabia slams accusations
In an unusually detailed statement, attributed to a Saudi Foreign Ministry official, Saudi Arabia slammed the accusations from the Biden administration, denying that the cuts were “politically motivated.”
“Saudi Arabia would first like to express its total rejection of these statements that are not based on facts, and which are based on portraying the OPEC+ decision out of its “purely economic” context. This decision was taken unanimously by all member states of the OPEC+ group,” the statement said.
Saudi Arabia also described its relationship with US as “strategic,” which serves the “common interests of both countries.”
While the statement stressed that it strives to “preserve the strength of its relations with all friendly countries,” the kingdom firmly rejected accusations that distort its “noble objectives to protect the global economy from oil market volatility.”
Although it remains to be seen what action the Biden administration will take, Saudi Arabia has reaffirmed that the OPEC+ decision was adopted through consensus, took into account the balance of supply and demand and was aimed at curbing market volatility.
