Earlier this month, the world’s largest oil-producing countries agreed to significant cuts in production as a means of keeping oil prices high as the global economy faces a potential recession in the coming year. The group known as OPEC+, which includes both the OPEC countries and several other petroleum producers — notably Russia — not formally in the global oil cartel, said it would cut production quotas by 2 million barrels per day starting in November. The decision, led by top oil exporter Saudi Arabia along with other Gulf countries, was also seen as a slap in the face to President Joe Biden, whose administration had been frantically lobbying the Saudis and other Gulf allies to maintain or increase output and allow prices to continue to fall.
The OPEC move doesn’t mean production totals will fall by 2 million barrels exactly, as many countries were already not meeting their quotas, but it is expected to reduce global daily output by about 2 percent and put upward pressure on already high fuel prices in the U.S., forcing drivers to pay an additional 15 to 30 cents a gallon for gasoline. The decision will also have an impact on Europe, which is already facing high energy costs due to the cutoff of Russian gas exports. The International Energy Agency warned that higher oil prices could be “the tipping point for a global economy already on the brink of recession.”
Biden had hoped for cooperation from Riyadh to help starve Russian president Vladimir Putin’s war machine, which is largely funded by hydrocarbon sales, and further hinder his invasion of Ukraine (Russia’s deputy prime minister, who is under U.S. sanctions, was present at the OPEC+ meeting in Vienna). And of course, Biden wanted gas prices to be going down, not up, in the lead-up to November’s midterm elections.
The insult to Biden came just a few months after the president visited Saudi Arabia and exchanged an infamous fist bump with Crown Prince (and newly appointed prime minister) Mohammed bin Salman. That gesture of friendship with a brutal tyrant was readily interpreted as a nasty bit of realpolitik, with Biden bowing to the fact that he needed Saudi Arabia to keep the oil flowing to keep both inflation and Russia in check. On that visit, Biden secured an understanding from Saudi Arabia and its junior partner, the UAE, to increase production by a total of about 1.25 million barrels per day. The Saudis did ramp up production during the summer, when oil was over $120 a barrel, but backed off as prices began to fall again.
This month’s decision to sharply curtail oil production should not have been terribly surprising, considering that Saudi Arabia and the UAE in particular depend on oil revenues to fund their welfare states and economic-development projects, as well as to enrich their rulers. A global recession could put a deep dent in demand for oil, and if the petro-states continue to produce at their current levels, they might next year find themselves in a downward price spiral that would threaten their economic stability.
In an interview with Vox this week, Samantha Gross, director of the Energy Security and Climate Initiative at the Brookings Institution, pushed back on the widespread notion that this decision was primarily motivated by anything other than economics: “Middle Eastern states have their own interests, and they were genuinely concerned about rapidly falling oil prices and over-producing as the world was going into a recession. They did what they do in those situations: pulling back production. They have their own interests and economies to look after. And they have agency. It’s not just choosing between the United States and Russia.”
That’s certainly not how it’s being interpreted in Washington, however. The Biden administration expressed deep disappointment at Saudi Arabia, which the White House says coerced other OPEC+ countries into agreeing to the cuts over their objections. National Security Council spokesman John Kirby said U.S. officials had shown their Saudi counterparts an analysis showing there was no market basis to lower oil production, and dismissed Riyadh’s claims that the decision was purely economic as “spin.” Biden has threatened “consequences” for Saudi Arabia, but it’s not clear what those consequences might be; the president has few good options here.
The Saudi government, of course, has rejected the allegations of political gamesmanship and maintains that it is not taking sides in the conflict between Russia and Western countries. Whether because that narrative is true or merely to help sell it, Saudi Arabia’s state news agency announced on Friday that it was providing $400 million in humanitarian aid to Ukraine, and also that Prince Mohammed had made a supportive phone call to Ukrainian president Volodymyr Zelenskyy.
Intentionally or otherwise, the oil cuts could lend support to Russia’s war effort by weakening the impact of international sanctions and propping up the value of its oil exports. Then again, it might not benefit Moscow as much as the Biden administration fears: Gross, from the Brookings Institution, pointed out that forthcoming European sanctions and a U.S. proposal to put a global price cap on Russian oil could still make it harder for Russia to sell its oil at market price, if at all.
Nonetheless, lawmakers in Washington, particularly Democrats, see this latest insult as a sign that Saudi Arabia is an unreliable ally, straying from the U.S. orbit and cozying up to its fellow authoritarian states such as Russia and China. Both the Biden administration and congressional leaders are looking at ways to punish Riyadh for its perfidy. New Jersey senator Bob Menendez, chairman of the Senate Foreign Relations Committee, on Monday called for a freeze on all cooperation with Saudi Arabia, including arms sales, “until the kingdom reassesses its position with respect to the war in Ukraine.”
Several other prominent Democrats have joined Menendez in urging a rethink of U.S.-Saudi relations and pushing for the removal of U.S. soldiers and missile defense systems from Saudi Arabia and the UAE. Connecticut senator Chris Murphy has advocated redirecting a planned delivery of AMRAAM air-to-air missiles from Saudi Arabia to Ukraine and relocating U.S. Patriot anti-missile batteries currently stationed in the kingdom to Ukraine or NATO allies that need to backfill their own defense systems. Democrats are also looking to revive a bipartisan bill called “NOPEC” — No Oil Producing and Exporting Cartels — that would allow the Justice Department to sue Saudi Arabia and other members of the global oil cartel for antitrust violations.
To probably nobody’s surprise, no Republicans are joining in this chorus of recrimination. Instead, the GOP is using the opportunity to hammer Biden and the Democrats for not supporting domestic oil production, which supposedly could have prevented this. The notion that the U.S. is “energy independent” during Republican administrations but at the mercy of Saudi Arabia under Democrats is a canard: The U.S. is a net petroleum exporter under Biden, just as it was under Donald Trump, and the Biden administration has taken heat from environmentalists for its liberal issuance of permits to drill for oil and gas on public land. Opening up even more oil production is one of several bad options the administration has for responding to the OPEC+ decision, and would not have a meaningful near-term impact on oil prices anyway.
Of course, the real reason why Republicans are so quiet about the Saudis’ betrayal is that they stand to benefit from it politically on a massive scale. In itself, a slight uptick in gas prices isn’t necessarily a game changer for the midterm elections, but with so many tight races in key battlegrounds, it’s bad news for the ruling party. A recent piece at the Intercept makes the case that the oil-production cuts are a deliberate act of election interference on the part of Prince Mohammed, who is friendly with Trump and stands to benefit from a Republican takeover of Congress that would set up Trump or some other MAGA stand-in to win the presidential election in 2024. Several analysts who spoke to the Intercept interpret the move as a deliberate October Surprise from the Saudis.
A savvy operator like Prince Mohammed is surely aware of the political consequences of all his actions, including in the U.S. Whether or not it was his primary motive for cajoling his fellow OPEC leaders into cutting production, he was surely not ignorant of the impact that move might have on the midterms. The Saudi government says the Biden administration asked it to delay the move by a month until after the elections, which is true, is embarrassing for the U.S. Like his buddy Trump, the Saudi crown prince is a practitioner of the politics of domination and humiliation, and in a certain light, the past few months have been an object lesson in that: Biden went to Riyadh hat in hand in July to beg a dictator he once called a “pariah” to keep the oil flowing. He failed to secure a commitment, the Saudis turned their backs on him a few months later, he was reduced to begging again, and they screwed him over anyway.
If the midterms turn out to be a red wave after all, plenty of other factors will have played into that. The OPEC+ cuts may not even make much of a difference: Oil prices have not skyrocketed as of yet, and slowing demand could keep them stable. However, Saudi Arabia had the option of throwing Biden and his party a political lifeline by allowing prices to decline and Americans to pay a little less at the pump this election season — and they chose not to.
If nothing else, the lesson here is that Washington has little to no leverage over policy in Riyadh anymore, even when U.S. and global economic interests are at stake. Saudi Arabia wants to be treated as an equal partner to the U.S., not as the puppet state of a superpower. Part of the love connection between Prince Mohammed and Trump stems from the fact that Trump fulfills that desire, if only because he admires absolute power, doesn’t care about human rights, and is happy to engage in corrupt dealings with foreign autocrats.
Disentangling the U.S. and the global economy from the strings of Saudi Arabia’s oil monopoly is not something that can be done overnight. Indeed, the time to start working toward this goal was decades ago, when the devastating impact of energy crises was clear but we were not in the midst of one. And the solution is not to dig up more fossil fuels of our own, as Republicans and energy-industry executives repeatedly claim, but rather to dramatically decrease our overall dependence on these commodities. Europe is finally waking up to the urgency of that need, and some Americans are as well, but our habit of waiting until a crisis arises and making policy in reaction means the steps we take in the direction of genuine “energy independence” are always too little, too late.