Saudi Arabia, US clash over OPEC+ production cuts

  • Saudi Arabia refuses to see OPEC+’s decision as political.
  • He says he told the U.S. that the delay would be economically negative.
  • It says the decision is based on market balance, keeping volatility in check
  • The White House says it presented analysis that cuts hurt

CAIRO (Reuters) – Saudi Arabia rejected criticism of last week’s OPEC+ decision to cut its oil production target as “not factually based” despite U.S. objections, and said on Thursday that Washington’s Postponing the request for one month had a negative economic effect.

The White House hit back on Thursday, saying it had presented the Saudis with analysis showing the cuts could hurt the global economy. This exchange came at a time when relations between the two countries had already been frosty.

OPEC+, a group of producers made up of the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, last week pushed against its production targets after weeks of lobbying by US officials against such a move. announced a reduction of 2 million barrels per day.

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The move comes despite fuel markets remaining tight with inventories in major economies lower than when OPEC has cut output in the past.

Cuts in OPEC+ have sparked concerns in Washington about the potential for higher gasoline prices ahead of November’s US midterm elections, when Democrats are trying to maintain control of the House and Senate.

US President Joe Biden promised earlier this week that there would be “an impact” on US relations with Saudi Arabia after the OPEC+ move.

The Saudi foreign ministry said in a statement on Thursday that OPEC+ decisions were adopted through consensus and aimed at balancing supply and demand and reducing market volatility.

A statement from the Saudi Ministry of Foreign Affairs referred to talks with the US ahead of the OPEC+ meeting on Oct. 5, asking for a one-month delay in the cuts.

In a statement, the Saudi Ministry of Foreign Affairs said, “Through ongoing consultations with the U.S. government, all economic analyzes have suggested that delaying the OPEC+ decision by one month would be negative for the economy. It has been shown that it has the impact of

The US has accused Saudi Arabia of yielding to Moscow, which opposes a Western cap on Russian oil prices in response to its invasion of Ukraine.

White House spokesman Jack Kirby said in a statement: “We have presented our analysis to Saudi Arabia, saying there is no market justification for lowering the production target, and we will continue to monitor the situation at the next OPEC meeting to see how things develop. It has shown that it can wait until,” he added, adding that other OPEC members have told the US they feel “coerced” into supporting Saudi Arabia’s decision.

A Saudi foreign ministry statement, citing an unnamed official, emphasized the “purely economic background” of the oil cuts. Oil demand is weakening around the world, with OPEC, the US Department of Energy and the International Energy Agency all lowering their 2023 demand forecasts this week.

But the IEA added on Thursday that OPEC’s move could hurt demand, saying “higher oil prices could prove a tipping point for a global economy already on the brink of recession.” .

A Saudi statement said the kingdom viewed its relationship with the United States as a “strategic one” and emphasized the importance of mutual respect. The Gulf Cooperation Council (GCC) issued a statement backing Saudi Arabia’s comments praising Saudi Arabia’s efforts to protect the market from volatility.

In a survey last week, Goldman Sachs found that over the past 25 years, OPEC has slowed production when inventories in the Organization for Economic Co-operation and Development (OECD) countries, which make up the 38 wealthiest economies in the world, have been very low. He said he never cut back. OECD stocks are now 8% below their five-year average. However, they noted that OPEC cut production during a period of weak demand.

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Reported by Ahmad Elhamy, Moaz Abd-Alaziz and Maha El Dahan.Edited by Jacqueline Wong, Tom Hoag, Jane Merriman, Margherita Choi

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