Chief energy adviser of the White House, Mr. Michael A. White, said that he was confident that Arab oil companies would not weaponise their energy despite growing anger in the Middle East due to Israel’s bombardment and siege on Gaza.
Amos Hochstein said that collaboration between US and Gulf producers including Saudi Arabia had been “very solid” in the last two years.
He said that oil has been weaponised at times since it was first traded. “We’re always concerned about this, and we work against it, but so far I don’t think it has,” he stated in an interview. “We are in two active wars, the first involving Russia, the third largest oil producer in the world. The second is in the Middle East, where missiles fly near the place where oil production takes place, yet prices are at the lowest point in the year.”
Hochstein stated that “we can’t rest because it is a constantly changing situation”.
He added that “the collaboration and coordination between producers and consumers in the last couple of years have been very strong to try and prevent energy shocks.”
Opec+ members have rejected Iranian calls for an embargo to protest Israel’s military tactics against Hamas in Gaza.
People familiar with Saudi Arabia’s thinking, the world’s largest oil exporter, believe that a recent drop in oil to $77 per barrel, a four-month record low, and the mounting anger of members over Gaza may have contributed to the decision to cut oil supplies further.
Riyadh will likely extend voluntary cuts in oil production into next year at the Opec+ meeting on November 26. A production cut of 1mn barrels per day, or about 1% of global supplies, may be considered.
Saudi Arabian energy minister Prince Abdulaziz bin Salman is the half-brother of Crown Prince Mohammed bin Salman who leads the Opec+ in cutting production. This has been the case since October 2022, despite the White House’s pushback.
Saudi Arabians close to the thinking process have said that there has been no final decision and that any public statement by the energy minister of the country will likely focus on the oil markets, not the Israel-Hamas conflict.
Riyadh insists on a regular basis that its decisions are made based not on political considerations, but rather market conditions.
Prince Abdulaziz has recently criticized hedge funds for increasing their bets on oil amid expectations that market could move into a slight surplus next year due to the weak global economic and the rising supply outside Opec.
Saudi Arabia, along with other Arab countries, has condemned Israel’s war on Hamas, which according to Palestinian officials has killed more than 13,000 Palestinians, and called for an immediate cessation of hostilities.
According to Israeli officials, this has caused a rift between the US’s Arab ally and the Biden administration. The Biden administration has steadfastly supported Israel’s offensive following Hamas’s deadly attack on October 7, which killed around 1,200 people. The Palestinian Islamist group took about 240 other hostages.
Hochstein refused to comment on whether Opec+ would extend the production cuts or the Biden administration’s discussions with Saudi Arabia and others producers.
He said that Washington and the EU had “regularly communicated on many issues” over the last two years, adding that “things were very strong”.
Hochstein stated, “I believe we have reached an agreement with producers from the US, Middle East, and other parts of the world, that when prices reach a certain level, it will negatively impact global economic growth, and they’ll be affected.” They know our position pretty well and I believe I understand theirs. “We may not always agree, but we can still work together.”
After President Joe Biden’s appointment, relations between Washington and Riyadh became strained. He had promised to reassess US relationships with the Kingdom and not engage Prince Mohammed.
Saudi Arabia and Washington reached a deal which would have normalised the kingdom’s relations with Israel, in exchange for a US Security Pact and cooperation on Israel’s nuclear ambitions.
Both Saudi and US officials hinted at the possibility of building on these negotiations in the long term.