DREAM / The Prime Minister resigns and wakes up under the Parisian bridge!

 Kliko këtu për të tjera
Voxpress:

Reducing oil production, the US warns Saudi Arabia: There will be consequences

2022-10-14 21:13:54Biznes SHKRUAR NGA REUTERS
Reducing oil production, the US warns Saudi Arabia: There will be consequences
Saudi Crown Prince Mohammed bin Salman and President Joe Biden

Saudi Arabia rejected as "not based on facts" the criticism of the decision taken last week by the OPEC+ group to reduce the level of oil production, despite the objections of the United States. Saudi Arabia said on Thursday that Washington's request to delay production cuts by a month would have had negative economic consequences.

The White House countered by saying that it had presented the Saudis with an analysis showing that cutting oil production could harm the world economy, and hinted that the Saudis had also pressured other member countries to vote on the decision. Officials from both countries are expected to discuss the situation soon.

The exchanges have created a cooling of the relationship between the two countries, which for decades have had an alliance based on the "energy in exchange for security" relationship.

OPEC+, the group of producing countries that includes OPEC countries and Russia, announced last week that it will cut production levels by 2 million barrels per day, after weeks of lobbying by US officials against such a decision.

The decision came despite fuel markets continuing to contract, with inventories in major economies at even lower levels than during previous periods when OPEC cut production.

The OPEC+ decision has raised concerns in Washington about the possibility of further increases in fuel prices ahead of the midterm elections in November, when Democrats will try to retain control of the House of Representatives and the Senate.

US President Joe Biden vowed earlier this week that "there will be consequences" for US-Saudi Arabia relations after the OPEC+ decision.

Asked about the situation on Thursday during a trip to Los Angeles, President Biden told reporters that "we will talk to them."

The OPEC+ decision was reached by consensus, after taking into account the balance of supply and demand, and aims to calm market fluctuations, the Saudi foreign ministry said in a statement on Thursday.

The Saudi ministry's statement cited consultations with the United States ahead of the October 5 OPEC+ group meeting, when it was asked to postpone the oil production cut by a month.

"The kingdom clarified in ongoing consultations with the US administration that all economic analyzes show that postponing the OPEC+ decision by one month, as suggested, would have negative economic consequences," the Saudi foreign ministry said.

The United States has accused Saudi Arabia of vassalage to Moscow, which opposes the West's imposition of a price ceiling on Russian oil in response to the attack on Ukraine.

"We presented Saudi Arabia with analysis showing that there is no market-based reason for production cuts, and that they could easily wait until the next OPEC meeting to see how things play out," he said in a statement. White House spokesman John Kirby said, adding that other OPEC countries had told the United States they felt "compelled" to support the Saudi decision.

The Saudi foreign ministry statement, citing an anonymous official, emphasized the "entirely economic context" of the oil production cut. Demand for fuel has weakened worldwide, and OPEC, the US Department of Energy, and the International Energy Agency (IEA) this week cut their forecasts for market demand through 2023.

However, the IEA added on Thursday that OPEC's decision could worsen demand, saying "increased fuel prices could serve as the tipping point for an economy that is already on the brink of recession."

The Saudi statement says the kingdom perceives the relationship with the United States as "strategic" and emphasizes the importance of mutual respect. The Gulf Cooperation Council (GCC) released a statement in support of Saudi Arabia's comments, praising the kingdom's efforts to protect markets from volatility.

In a study last week, Goldman Sachs said that in the past 25 years, OPEC has never cut production when reserves have been at such low levels in the Organization for Economic Co-operation and Development (OECD) countries, where include 38 of the richest countries in the world. OECD prices are about 8% below their five-year average. However, Goldman Sachs notes that OPEC has cut production during periods of weak market demand.


Në përputhje me standarded JTI

Video

SHIKO KANALIN NE YOUTUBE
×