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OPEC+’s decision to cut oil production came at the “worst possible moment” and will add to global inflationary pressure, a senior US State Department official said during a visit to the Middle East.
“The impact is wide ranging,” Barbara Leaf, Assistant Secretary of State for Near Eastern Affairs, told reporters in OPEC member state Kuwait on Wednesday.
“We’re barely, all of us, globally coming out of the economic effects of the pandemic, and the knock on effects, economic effects of Putin’s war has further sent economies reeling,” she said. “So adding to inflationary pressures from energy is simply the worst possible moment to do so.”
The Organization of Petroleum Exporting Countries and its partners, a 23-nation group led by Saudi Arabia and Russia, on Oct. 5 opted to lower their output targets from next month by 2 million barrels a day.
That triggered a crisis in US-Saudi relations. US President Joe Biden — who’s pledged to lower pump prices for American motorists — said the move was ill-judged and that there would be “consequences” for Saudi Arabia. Several members of Congress have accused the kingdom of aligning with Russia and suggested Washington could restrict weapons sales to Riyadh or pass a bill known as NOPEC, enabling the US to sue OPEC members for manipulating the energy market.
Leaf said Biden would take a “methodical” approach to Saudi Arabia, one of the US’s most important and long-standing allies in the Middle East.
“No body has suggested an escalation,” she said.
Saudi Arabia and other OPEC+ producers denied they’re lowering supply for political reasons. They said the outlook for the global economy suggested oil-demand growth would be weak in the next few months.
“There’s no question that there have been statements both from Riyadh and Washington telling us that all is not well,” Dana Stroul, US Deputy Assistant Secretary of Defense for the Middle East, said at the same briefing. “We’re going to have to recommit to dialog to discuss a way forward.”
