On CNN’s “The Lead” Tuesday, it was reported that the Biden White House was panicking over OPEC’s presumed cuts to production capacity, to be enacted at their next meeting Wednesday. The report described a “furious, last-ditch, wide-scale effort” to try and lobby against the cuts.
CNN Senior National Security Correspondent Alex Marquardt reported that according to a “US official, “the White House, in fact, is panicking, that this is something that they desperately do not want to happen. Cutting oil production means higher oil prices, it means higher gas prices. That, of course, is something that the Biden administration does not want to happen right now. So, tomorrow, there’s this meeting of the oil-producing countries, this cartel known as OPEC. It is ostensibly led by Saudi Arabia. Russia is also a member. The United States is not a member. And what we have learned, myself and our colleagues Natasha Bertrand and Phil Mattingly, is that there is this furious, last-ditch, wide-scale effort to lobby the OPEC-plus oil-producing countries to not cut oil production, that senior members of the Biden administration are reaching out to members of the cartel, including Saudi Arabia, Kuwait, and the United Arab Emirates. The cartel could cut as much as 1 million barrels a day in production, that would be the biggest cut since the beginning of the pandemic. Now, this effort is being led by the top Biden administration official for energy, Amos Hochstein. They’ve also enlisted the top White House official for the Middle East, Brett McGurk. But interestingly, they’ve also — just to show you how widespread this is — reached out to the Treasury Secretary, Janet Yellen, asking her to reach out to counterparts around the world. And we actually got talking points that the White House sent to Treasury that have very blunt language suggesting that Yellen say some of this to her counterparts. They say that this would be a ‘total disaster[,]’ it would be seen as a ‘hostile act’ against the United States. This is very blunt language. The White House says that these were draft talking points and not used. But it does give insight into how nervous they are, Jake.”
Analysts are predicting OPEC and its allied nations will enact a minimum 1 million barrel per day cut to its cumulative production quotas, which may be supplanted by additional cuts by individual nations, in an effort to support the price of oil and reduce global demand.
The Cartel argues it needs to reduce global demand, due to many member nations pumping at their maximum production capacity, and still being unable to supply their quota. Additional demand produced by lower prices could force Saudi Arabia and only a couple of other nations in the cartel with excess capacity, to have to approach their maximum capacity for production output. They maintain that would be unsustainable over the long term, and taxing on their production infrastructure.
Analysts believe OPEC+ will be shooting to raise the prices of crude to somewhere in the $95 per barrel range.
OPEC+ will hold its next meeting on Wednesday, October 5th.
