Can you stomach another botched move by our president? Biden has soured our relationship with Saudi Arabia since he took office, the nation announced on Sunday that it would lead the members of the Organization of the Petroleum Exporting Countries (OPEC), including Russia, to cut over one million barrels of output a day starting next month. This will most certainly lead to higher U.S. inflation.
Saudi Arabia also made it known that it would cut production by another 500,000 barrels a day starting in May. Even before this new cut, oil prices rose 7.5% at the week’s opening after the Saudi announcement.
The managing director of Clearview Energy Partners, Kevin Book, told the media that new cuts would cause U.S. gasoline prices to rise roughly 26 cents per gallon.
This move this weekend followed OPEC’s decision last October to reduce production by two million barrels a day. “There’s going to be some consequences for what they’ve done with Russia,” Biden threatened in October. “I’m not going to get into what I’d consider and what I have in mind. But there will be — there will be consequences.”
“President Biden said he would make the kingdom of Saudi Arabia a pariah state. That was an enormous mistake,” former Secretary of State Mike Pompeo said. “But let’s look at the facts. They are an important security partner for the United States. There’s only one country in that whole region that wants to threaten the United States of America and Israel and wipe us from the face of the earth. That’s the leadership in Iran and the kingdom of Saudi Arabia’s been an important partner in helping protect us from that threat.”
This is likely stemming from things like Biden calling the Saudi nation a “pariah” in 2019 when he was running for the presidency.
“Given the preventive nature of OPEC decisions, there is clearly something OPEC knows about demand trends and inventories that we have yet to discover fully in overall supply and demand balances,” Christyan Malek, global head of energy strategy at JP Morgan, told the press.