HomeBlogFinanceUS dismisses Saudi defence of Opec+ oil output cuts as ‘spin’

US dismisses Saudi defence of Opec+ oil output cuts as ‘spin’

The White House on Thursday dismissed Saudi Arabia’s claims that recent Opec+ production cuts had nothing to do with the kingdom’s stance on Russia’s invasion of Ukraine as “spin”, as the rift between the two states over oil prices deepens.

“The Saudi foreign ministry can try to spin or deflect, but the facts are simple,” said John Kirby, a top spokesperson for the US National Security Council, referring to Saudi Arabia’s argument that last week’s cuts had been decided on a purely economic basis.

“In recent weeks, the Saudis conveyed to us — privately and publicly — their intention to reduce oil production, which they knew would increase Russian revenues and blunt the effectiveness of sanctions. That is the wrong direction,” Kirby added.

The rebuke came after Saudi Arabia released an extraordinarily detailed and unusual defence of Opec+’s cuts on Wednesday night, in which it argued that the moves had been the result of a unanimous decision by the cartel’s members, and were unrelated to the war in Ukraine.

The statement also appeared to suggest that the US had sought to delay the upcoming oil production cuts by a month, which would have reduced the impact of any increase in crude prices until after the US midterm elections.

Kirby did not deny that Washington had asked to delay the cuts by a month but pushed back on the suggestion that the request had been politically motivated, saying the US had put forward an economic case for waiting to make any decisions on cutting production.

“We presented Saudi Arabia with analysis to show that there was no market basis to cut production targets, and that they could easily wait for the next Opec meeting to see how things developed,” he said. The cartel announced last week it would meet in December, though it has previously been meeting each month.

Kirby added that the US had heard from other Opec nations privately that “they also disagree with the Saudi decision, but felt coerced to support Saudi’s direction”.

According to people familiar with the discussions, the United Arab Emirates, Iraq and Bahrain were among the Opec+ members that were uncomfortable with the reductions, although none made their dissent public.

Saudi Arabia’s decision to cut production quotas has infuriated officials in Washington, particularly in light of US president Joe Biden’s visit to the kingdom over the summer, which was intended to convince Riyadh to increase oil production to help keep prices low and ensure the effectiveness of the sanctions regime on Russia.

In making the trip, Biden had reversed a previous pledge to make Saudi Arabia a pariah state for its role in the killing of journalist Jamal Khashoggi, garnering criticism from Democrats and others sceptical of the benefits of the US-Saudi relationship.

Biden and other US officials have since vowed to work with Congress to re-evaluate ties with Saudi Arabia and to take steps to punish Riyadh for its decision.

The US will watch to see whether Opec+ decides to increase oil production in its next meeting as it assesses its relationship with the kingdom, Kirby said, adding that it is “certainly a factor and it’s a significant one”.

“We’re going to watch their future meetings to see where they come out on this,” he said. “What we’re looking for . . . is to see is that the track [the Saudis] want to stay on? Do they want to stay on the side of Russia? Do they want to continue to provide that tacit support to the Russians ability to continue to kill the Ukrainian people?”

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