Policy

Biden political gamble on Saudi trip unlikely to drive down gas prices

Associated Press/Patrick Semansky
President Joe Biden speaks about the May jobs report, Friday, June 3, 2022, in Rehoboth Beach, Del. (AP Photo/Patrick Semansky)

President Biden is using key political capital on a risky gamble – that meeting with condemned Saudi Crown Prince Mohammed bin Salman will convince the Kingdom to stabilize global oil markets and ease prices for Americans at the gas pump.  

But experts say it’s not guaranteed that the trip will produce lower gasoline prices and the political cost may be far greater for the president. 

“I don’t believe there’s an amount of oil the Saudis could provide that would substantially reduce U.S. gas prices. It will be difficult for Biden to come away with something he can call a win,” Samantha Gross, fellow and director of the Energy Security and Climate Initiative at the Brookings Institution, told The Hill.  

Biden’s allies, and even critics, are stressing the necessity of the president addressing areas of cooperation with Riyadh for U.S. national and global security despite revulsion at Mohamad and the Kingdom’s violations of human rights.  

Further, Saudi Arabia’s position as the world’s second largest oil producer and unofficial head of the Organization for Petroleum Exporting Countries (OPEC), make it a key gatekeeper in helping to lower peak energy prices.  

The average price of a gallon of gas reached nearly $5 on Friday. 

The White House is planning for Biden to travel to the Middle East in July. 

Announcement of the trip comes as the OPEC+, a group of major oil exporting nations that includes both Saudi Arabia and Russia, recently sped up its plans to increase oil supply as part of its efforts to offset pandemic-related supply cuts, from 432,000 barrels per day previously to 648,000 barrels per day for July and August.  

“Saudi Arabia wants to manage the oil market via OPEC+ rather than through unilateral moves,” Ben Cahill, a senior fellow at the Center for Strategic and International Studies, said in an email. 

But, Cahill said, it’s not clear what the countries will do in the coming months.  

“And the reality is that spare capacity is quite limited, and Saudi Arabia and the UAE and the rest of OPEC+ have to manage it carefully. Their output may rise, but we shouldn’t expect a big burst of production from Saudi Arabia this fall,” he said.  

“It’s not going to be because Biden has made the trip there,” he said, noting that they would be most motivated by high oil prices in order to prevent demand reduction.  

Robert Weiner, professor of International Business and International Affairs with the George Washington University, said it’s impossible for any one country to fill the void left by sanctions on Russian oil, put in place over Moscow’s invasion of Ukraine.  

“There is no way that Saudi Arabia has the ability to produce as much oil as the world has lost because of the Russian embargo, and no country has that ability.” 

Claudio Galimberti, senior vice president of analysis at Rystad Energy said that at most, the Saudis could ramp up production to levels that would bring down oil prices by $10 to $15 per barrel. But he added that this is unlikely.  

Instead, the Saudis are likely to stick to the OPEC+ timetable and only increase output after that if Russian production drops significantly.  

And while crude oil prices, which were around $120 per barrel Friday, are a major predictor of gasoline prices, other factors, including reduced refining capacity, are also currently raising prices. 

Galimberti said that could be resolved by August, as new refineries open in the Middle East.  

While it’s not clear whether the trip to the Kingdom will deliver lower gas prices, it also comes with political risks. 

Saudi Arabia faced scrutiny over its human rights record including the devastation of the war in Yemen, arbitrary detention of political dissidents and the 2018 killing of U.S.-based journalist Jamal Khashoggi at the direction of Mohammed.  

Biden’s Democratic allies in Congress have given their blessing for the trip, while urging the president to be direct and express concern about human rights violations in the Kingdom.  

“I think it’s important for the president of the United States to have opportunities for conversations with the Saudis, they’re a strategic player in the region,” Sen. Ben Cardin (D-Md.), the ranking Democrat on the Senate Foreign Relations Committee, told The Hill. 

“I hope that he will be very direct about our concerns, including the human rights violations, and our need for greater cooperation from Saudi, in regards to oil production. So there’s reasons why dialogue needs to take place. I hope they have frank discussions.”  

Senate Foreign Relations Chairman Bob Menendez (D-N.J.), an outspoken critic of the administration’s foreign policy, also gave his blessing for Biden’s trip.  

“He has a responsibility to try to bring that region together as a strong counterweight to Iran. He has a reason to try to ensure that there is energy stability in the world. I think he has a reason to try to extend greater relationships for the state of Israel. But in doing that, he should also be raising human rights…” Menendez told The Hill.  

Biden is expected to meet with the Crown Prince in July, part of his first visit as president to the Middle East and that will likely kick off in Israel. 

The trip is considered essential for the president to demonstrate the administration’s commitment to the Middle East and Gulf.  

Republicans have criticized Democrats, alleging that they have lost focus on the region’s importance. 

“The Biden administration has gone out of their way to alienate the Saudis and to drive away our allies in pursuit of their effort to embrace Iran and the theocratic and incredibly hostile regime there,” Senator Ted Cruz (R-Texas), told the Hill.  

The administration has also failed to return with Iran to the 2015 nuclear deal, the Joint Comprehensive Plan of Action (JCPOA), that former President Trump withdrew the U.S. from in 2018.  

While the talks to revive the JCPOA are on “pause,” Biden’s envoy for Iran, Rob Malley, told lawmakers last month that chances for success are “tenuous at best”. 

Malley added that without the constraints of the deal, Iran has accumulated enough enriched uranium and know-how to produce a nuclear bomb within a matter of weeks, “before we can know it, let alone stop it.”   

Strengthening an anti-Iran coalition in the Middle East – among Israel, Saudi Arabia, the United Arab Emirates, and others – is a top priority for the president and lawmakers on both sides of the aisle. 

On Thursday, Democrats and Republicans introduced legislation directing the Pentagon to pursue an integrated missile defense system in the Middle East with Israel, Gulf nations and Iraq.  

The bill was introduced in the spirit of the Abraham Accords, the normalization agreements reached by Trump between Israel, the U.A.E. and Bahrain.  

Biden has come under criticism from Republicans and some supporters for failing to harness the potential of Israeli-Arab rapprochement, which the White House hopes to accomplish with its trip.  

Tags Ben Cardin Biden crude oil human rights violations inflation Jamal Khashoggi Mohammed bin Salman oil saudi arabia Washington Post

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