Shafaq News / Joe Biden’s July trip to the Middle East is poised to be a significant moment for gasoline prices, with the US president setting his sights on a promise of higher production from Gulf allies.
The stakes are high for the oil market because Saudi Arabia and the United Arab Emirates are the only countries with significant spare capacity to pump crude. Without a pledge from the two OPEC members to boost production, the president would lose a powerful tool for alleviating the economic and political pain caused by high fuel prices.
The trip to Saudi Arabia puts Biden in an awkward position, after he vowed during his campaign to make the kingdom a “pariah” over its human rights record. The president said he wouldn’t specifically ask Saudi King Salman or Crown Prince Mohammed Bin Salman to raise oil production when he sees them on July 16. The broader Gulf Cooperation Council, a forum of largely oil-rich countries along the Persian Gulf, is a more appropriate setting for such a request, he said.
“All the Gulf states are meeting. I have indicated to them that I thought they should be increasing production,” Biden said Thursday at a news conference in Madrid following a NATO summit. “I hope we see them, in their own interest, concluding that makes sense to do.”
Oil fell after Biden’s comments, with West Texas Intermediate futures sinking 3.9% to $105.50 a barrel as of 10:43 a.m. in New York.
Even if Saudi Arabia and the UAE are willing to assist the US, just how much extra oil the two countries could provide has been questioned by this week by Shell Plc Chief Executive Ben van Beurden and French President Emmanuel Macron. While official data indicates the duo have almost 3 million barrels a day of spare production capacity, deploying this would require them to pump at levels rarely sustained before, if ever.