Saudi Arabia keeps lid on oil output

U.S. officials dispatched to discuss range of issues, including war in Yemen and energy supplies

DUBAI, UNITED ARAB EMIRAT E S 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 co-ordinator, 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 U.S. 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 U.S. 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 Organization 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 authorized to brief journalists.

King Salman also said as much in a call last week with U.S. President Joe Biden. According to a Saudi readout of the call, the king highlighted “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 Plus, 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 (U.S.) a barrel, its highest level in eight years. AAA says the current U.S. national average for a gallon of regular gasoline costs around $3.50 — a 40 per cent 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 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.” 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 Plus curbs made during the coronavirus pandemic.

The Biden administration has emphasized U.S. 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.

Higher prices at the pump pose a threat to Democrats at the polls in upcoming midterm elections