Oil rises to $100 a barrel as Biden fails to win Saudi promise to increase output

Oil rises to $100 a barrel as Biden fails to win Saudi promise to increase output

Oil prices surged above $100 a barrel on Monday after President Joe Biden left Saudi Arabia over the weekend without getting a commitment from the kingdom to increase output.

Brent crude, the international benchmark, was up almost 2.5% to around $103.50 in early Monday morning, while West Texas Intermediate, the US benchmark, was also up nearly 1%. 2% above $99 a barrel.

Prices soared on Monday following comments by Saudi Foreign Minister Prince Faisal bin Farhan Al Saud, who said the issue of OPEC+ to boost oil supply was not even raised during a summit meeting between Biden and other Arab leaders.

“Traders got a clear message from Biden’s recent visit to Saudi Arabia, during which President Biden spoke with several Arab leaders,” market analyst Naeem Aslam told the Guardian.

President Biden left Saudi Arabia over the weekend without getting a commitment from Saudi Crown Prince Mohammed bin-Salman that the kingdom would increase oil production.
President Biden left Saudi Arabia over the weekend without getting a commitment from Saudi Crown Prince Mohammed bin-Salman that the kingdom would increase oil production.
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“The message is that it is OPEC+ that makes the decision on oil supply, and the cartel is not even remotely interested in what Biden is trying to accomplish,” Aslam said.

“OPEC+ will continue to control the supply of oil, and one country alone cannot determine the supply of oil, at least that is the message that traders have taken from Biden’s visit to Saudi Arabia.”

Biden said Friday that the Saudis shared his “urgency” to increase supply and that he hopes the kingdom will take “further steps in the coming weeks” toward that goal.

But Saudi officials said any decision on increasing output would have to be made within the framework of OPEC+, the cartel of oil-producing nations that is due to hold its next meeting on August 3.

Saudi Crown Prince Mohammed bin-Salman
Biden, who had vowed to avoid the Saudi crown prince, met him in the region as Americans grapple with the burden of high gasoline prices.
VIA REUTERS

Administration officials downplayed expectations of any immediate increase in Saudi oil production, which could help alleviate politically damaging high gasoline prices for Biden at home.

One member of OPEC+ is Russia, the world’s second largest oil producer. The Americans have been trying to cut off Russian power from global markets as punishment for President Vladimir Putin’s decision to invade Ukraine.

While the Europeans are ready to walk away from Russian oil and natural gas, the Saudis have refused to isolate the Kremlin.

Biden has come under fire from many of his own supporters for meeting with the defactor Saudi ruler, Crown Prince Mohammed bin-Salman, who was implicated in the murder of Washington Post columnist Jamal Khashoggi.

Joe Biden
The president said he hopes the Saudis will take steps to ease high energy prices in the coming weeks.
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But high gasoline prices and sizzling levels of inflation forced the president to abandon a campaign promise to treat bin-Salman as a “pariah.”

“I am doing everything I can to increase supply for the United States of America, which I hope will happen,” Biden said Friday.

“The Saudis share that urgency. And based on our discussions today, I expect we’ll see more steps in the coming weeks.”

While gasoline prices hit record highs a month ago across the country, they have fallen steadily in recent weeks as demand falls on fears of a recession.

Man pumping gasoline
While gasoline prices hit record highs this summer, they have fallen steadily in recent weeks.
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The average price of a gallon of regular unleaded fuel in the US stood at $4.52 on Monday, down from $4.99 a gallon a month ago, according to AAA.

The current OPEC+ deal expires in September, opening the door to potentially more output after that, though questions remain about how much excess capacity the Saudis have.

“We listen to our partners and friends from all over the world, especially from consuming countries,” Prince Faisal told reporters.

“But at the end of the day, OPEC+ follows the market situation and will supply power as needed.”