Oil-producing group OPEC will continue to strengthen its relationship with the U.S. energy industry under Joe Biden’s new administration, the oil cartel’s Secretary General Mohammed Barkindo told CNBC on Tuesday.
It comes despite the Democratic leader’s stated commitment to fight climate change and focus on renewable energy.
Barkindo congratulated Biden for his upcoming inauguration during a virtual panel hosted by the Atlantic Council Global Energy Forum, and said: “We continue to deepen this relationship, which we found mutually beneficial to all of us.”
“And we intend to continue along this fashion going forward and the administration of President Biden,” he told CNBC’s Hadley Gamble in an exclusive interview.
OPEC leaders were known to have at times communicated with outgoing President Donald Trump, who was particularly vocal and active about the oil markets and what he believed oil-producing countries should do to alter crude prices.
Biden’s likely change in approach — as well as his focus on investment in non-oil energy sources — have reportedly unsettled some in the 13-member oil-producing group. The president-elect’s potential return to the Iran nuclear deal, which could bring millions of barrels of new oil onto the market, has also raised concerns.
The OPEC chief has been diplomatic when it comes to discussing U.S. presidents, but some in the organization are wary of strains with Biden, according to sources cited by Reuters.
Asked if he had been in touch with Biden yet, Barkindo replied: “No, not at all.”
“We believe that we have established very mutually beneficial productive relationships with the industry in the United States. And I think we have no option but to continue to strengthen this relationship under President Biden,” he added.
Climate change under Biden
Dan Yergin, a longtime oil industry expert and founder of IHS Markit, said during the same panel that Biden’s biggest impact on the oil industry would be his commitment to climate change action.
“I think he is going to step on the gas on climate,” Yergin said. He expects the administration to provide “incentives for electric vehicles … For solar, wind, and more regulations (for the oil industry) across the board.
Biden has named climate change as one of the four biggest crises facing the U.S. and plans to rejoin the Paris Climate Accord on his first day in office. Trump withdrew from the climate deal in 2017.
Looking ahead, global trends surrounding energy and climate may be worrying OPEC member states far more than whoever is in the White House.
“It is extremely important to understand one thing,” Fatih Birol, executive director of the International Energy Agency, said during the panel. “The share of oil in the global energy markets will decline. And the speed of this decline will be determined by the pace of energy transitions.”
“The bitter truth is that a clean energy transition is coming, and coming very fast,” said Birol.
He also said the world should expect to see more innovations like carbon capture, hydrogen power, electric vehicles and new generation of nuclear power.
“The political position of the U.S. will give unmistakable signals to investors around the world,” he added.