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OPEC production cuts can prevent oil price slide


In the midst of what would become a 98-day series of declines, President Joe Biden was quickly recognized in August for one of his most serious political enemies: high gas prices.

It’s a winning round that could soon prove to be soon.

More than a month later tweets When he defeated “Putin’s price hike with a pump,” Biden faced forces that not even the US government could match. The OPEC + alliance of oil producing countries is ready to cut production of more than 1 million bpd to support global oil prices. A decision won’t be made until Wednesday, but the outlook sent crude rising past 6% before falling to just under $84 a barrel in New York.

Aside from domestic considerations, the OPEC+ moves show that the US effort to isolate Russia because of its invasion of Ukraine – and cap Russian oil prices – is not as effective as the Biden administration would like. The cartel discussions suggest that Moscow is working with a large group of countries in a way that is likely to boost the Kremlin’s finances. Russian Deputy Prime Minister Alexander Novak – who has been sanctioned by the US – is set to attend the group’s meeting in Vienna, according to people familiar with the situation.

Furthermore, the potential OPEC move comes at an inopportune time for Biden as he tries to control the narrative of rising costs ahead of the November midterm elections that will decide whether Democrats retain power. control? Conference. Rising oil prices lead to higher gasoline prices, one of the most visible signs of inflation to voters.

Pump prices, which have fallen 24% from a June record above $5 a gallon on the back of falling crude oil, were up fast before OPEC began considering cuts. Are from pause down nearly 100 days, the national average has risen to 12 of the past 13 days as refinery shutdowns and low imports on the West Coast have strained fuel supplies.

In California, home to the most expensive gasoline in the U.S., prices are nearing a June high and the increase is spreading to neighboring states. Nevada’s election battleground has the most expensive gas prices behind California, and other key states like Michigan and Arizona are bidding above the national average of $3,799 a gallon, according to data from the auto club. AAA.

“Higher prices are bad news for Democrats,” said Kevin Book, chief executive officer of research firm ClearView Energy Partners. “High prices haven’t helped the president’s approval rating, and they probably won’t help Democrats stand in the polls either.”

When asked about the possibility of OPEC moving on Monday, The White House Press secretary Karine Jean-Pierre said the administration’s focus was on ensuring the market had enough supply.

“Thanks to our efforts, we have seen some energy prices have fallen sharply from their highs, and US consumers are paying much less for pumps. And that will be our focus,” she said.

Gasoline prices have been top of mind, with Biden twice last week warn oil companies against the pump price hike, and his Secretary of Energy Jennifer Granholm publicly kicked Exxon Mobil Corp. and other oil companies for record profits and accusations that they are taking advantage of consumers.

Private, top Biden officials meet with executives from some of the nation’s largest oil and gas refining companies, including Phillips 66, Shell Plc and Marathon Petroleum Corp.during a tense meeting, where they suggested that without voluntary action they could force the industry to stockpile more fuel and offer the possibility of limiting exports.

Additional meetings with the companies are scheduled this week, according to a person familiar with the matter, but analysts say the Biden administration’s options for reducing gasoline prices, which have spent much of months to force refineries and domestic producers to increase output, is limited.

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