Saudi Arabia “coerced” smaller oil-producing members of OPEC to agree to production cuts that the Saudis knew would “increase Russian revenues and blunt the effectiveness of sanctions” designed to combat Russia’s aggression in Ukraine, the Biden administration said Thursday.
“We presented Saudi Arabia with analysis to show 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,” National Security Council coordinator John Kirby said in a statement. The Saudis rejected the appeal for delay.
The statement upped the ante in an increasingly acrimonious disagreement between the United States and its putative close partner in the Persian Gulf. The administration has been pressing Saudi Arabia to produce more oil to compensate for the global shortage and price increases caused by the Ukraine war.
The Kirby statement followed an unusually detailed and often caustic Saudi press release issued hours earlier in response to White House and congressional condemnation of the decision last week by OPEC Plus to cut its oil output by 2 million barrels a day, a move that could boost oil prices worldwide. The “Plus” refers to 10 partner nations, including Russia, who take joint oil production decisions with the 13-member OPEC cartel, of which Saudi Arabia is a core member.
The Saudis said their decision was based solely on “economic considerations” and was not “politically motivated” against the United States.
But in Washington, the cuts were widely seen as a political blow to President Biden ahead of a tough winter of economic challenges, and a month before midterm elections.
In response, Biden said he would be reviewing the U.S. relationship with Saudi Arabia and there would be unspecified “consequences” for the kingdom. A White House spokesman said Biden was open to proposals by a group of U.S. lawmakers that would penalize Saudi Arabia, including by ending arms sales.
There is a range of bilateral agreements and investments that could be reconsidered, including on energy, cyber and maritime security, counterterrorism, and the possibility of an integrated air-defense system that the United States has tried for years to persuade the Persian Gulf states to adopt. The White House has said its review would pick up steam after lawmakers return from their pre-election break — a timeline that probably puts the issue on the back burner until after the midterms.
Adel al-Jubeir, Saudi Arabia’s minister of state for foreign affairs and a former ambassador to the United States, told CNN on Wednesday that the U.S.-Saudi relationship was “very far” from broken, and was “very robust,” including “almost 80,000 Americans living and working in Saudi Arabia” and “a very strong trade and investment relationship.”
Biden visited Saudi Arabia in July and met with Crown Prince Mohammed bin Salman, the country’s day-to-day leader — brushing aside criticism from human rights activists who said such a meeting would reward the crown prince for his repressive tactics, including what U.S. intelligence concluded was approval of the 2018 killing of Saudi journalist Jamal Khashoggi by Saudi agents.
Biden aides asserted that the purpose of the trip was to improve the U.S.-Saudi relationship, rather than to ensure the kingdom keeps producing oil at a certain level. Mohammed has denied he ordered Khashoggi’s killing.
The delay of a decision to postpone production cuts for a month, the Saudi statement said, “would have had negative economic consequences.”
“These outcomes are based purely on economic considerations that take into account maintaining balance of supply and demand in the oil markets, as well as aim to limit volatility that does not serve the interests of consumers and producers,” it said.
Kirby, in his own statement, said: “the Saudi Foreign Ministry can try to spin or deflect, but the facts are simple. The world is rallying behind Ukraine in combating Russian aggression. The US has played a key role in assembling this coalition, and has engaged the Saudi leadership in that effort.”
“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,” he added.
In later comments to reporters, Kirby noted that the Saudis said the decision had “nothing to do with election politics here in the United States.” But “in our view … it makes no sense, just mathematically, for [Saudi Arabia] to cut supply.” At the same time, he said, the cuts “regardless of their arguments, benefited Russia” and were “to the detriment of low- and middle-income countries struggling to keep up with the demand” for energy.
In their own statement, the Saudis pushed back at criticism that the decision to cut production amounted to siding with Moscow in its war in Ukraine. “Any attempts to distort the facts about the Kingdom’s position regarding the crisis in Ukraine are unfortunate, and will not change the Kingdom’s principled position,” it said. Saudi Arabia was among 143 nations voting in favor of a U.S.-sponsored resolution at the U.N. General Assembly on Wednesday that condemned Russia’s illegal annexation of Ukrainian territory.
The Saudi statement also denied that it was solely responsible for the decision to cut oil production, saying such measures were based on “consensus.”
Kirby declined to specify which OPEC members he said had expressed concern about the production cuts and “their feeling that they were coerced” by the Saudis to go along with it. “I just assure you that there was more than one OPEC member that expressed and shared those concerns with us,” he said.
Russia has depended on fossil fuel exports, much of them to China, to fund its war machine. Oil and gas amounted to nearly half of its government revenues last year. This year, high prices have kept the money flowing despite Western sanctions.
The European Union is considering imposing a price cap on Russian oil and gas sales to decrease Moscow’s revenue while allowing fuel to continue to flow to countries in need. “The EU is actively working through the details, including implementation,” Kirby said. “How will you execute this? We still believe it is the right move, we still believe it is actually possible to do this … but the devil is in the details.”
Fahim reported from Istanbul. Sarah Dadouch in Beirut and Yasmeen Abutaleb in Washington contributed to this report.