US calls on OPEC and its allies to pump more oil

Aug. 11 (Reuters) – Key aides to U.S. President Joe Biden are pressuring OPEC and its allies to increase oil production to tackle rising gasoline prices they see as a threat to the global economic recovery.

Biden’s national security adviser Jake Sullivan criticized the world’s major oil producers, including Saudi Arabia, for what he called insufficient crude production levels in the aftermath of the global COVID pandemic -19.

“At a critical time in the global recovery, this is simply not enough,” he said in a statement.

The unusual statement has intensified international pressure and comes as the administration tries to contain a series of price hikes and bottlenecks in the economy that have fueled inflation concerns.

Biden has made recovering from the economic recession triggered by the pandemic a key priority for his administration.

The post also highlighted the new dynamic between Washington and OPEC since Biden’s predecessor Donald Trump broke with past practice by demanding specific policy changes to lower prices. Trump had threatened to withdraw military support from OPEC chief Saudi Arabia over the production.

The Biden administration is pressuring the OPEC + countries, which unites the Organization of the Petroleum Exporting Countries with Russia and other major producers, “on the importance of competitive markets in setting prices,” a Sullivan said. “Rising gasoline costs, if left unchecked, could harm the ongoing global recovery,” he added. “OPEC + must do more to support the recovery.”

Retail gasoline prices in the United States are around $ 3.18 per gallon at the pump, up more than a dollar from a year ago at the same time, according to the American Automobile Association.

International benchmark Brent crude was trading at around $ 70 a barrel on Wednesday, down half a percent, after the United States released its statement. That’s lower than prices above $ 77 in early July, but still represents an increase of nearly a third since the start of the year.

The pressure from the Biden administration for lower fuel prices is linked to its efforts to ensure global leadership in the fight against climate change by encouraging a broad shift from fossil fuels to cleaner energy sources and electric vehicles.

A Republican lawmaker criticized Biden, a Democrat, for discouraging domestic production of fossil fuels.

“It’s pretty simple: if the president is suddenly worried about rising gas prices, he must stop killing our own energy production here on American soil,” said Republican Senator John Cornyn of Texas, in a press release. as the White House ties a hand behind the backs of US energy companies is pathetic and embarrassing. “

U.S. oil production fell from a record 12.3 million barrels per day (bpd) in 2019 and has stagnated at around 11 million bpd since the pandemic.

OPEC + has gradually eased a record production drop of 10 million barrels per day, or about 10% of global demand, achieved in 2020 as oil use and prices recover from the pandemic-induced crisis . By July, the reduction had been relaxed to about 5.8 million bpd.

In a July meeting, OPEC + agreed to increase production by 400,000 b / d per month from August until the remainder of the 5.8 million b / d reduction. j is gradually phased out. OPEC + is due to hold another meeting on September 1 to review the situation.

On Wednesday, the White House also asked the Federal Trade Commission (FTC), which monitors anti-competitive behavior in U.S. domestic markets, to investigate whether the illegal practices are contributing to the rise in gasoline prices in the United States.

“During this summer driving season, there have been discrepancies between the price of oil and the cost of gasoline at the pump,” wrote Biden’s chief economic assistant Brian Deese in a letter to the FTC President Lina Khan.

He urged the FTC to “consider using all of its available tools to monitor the US gasoline market and tackle any illegal behavior.”

Reporting by Trevor Hunnicutt; Additional reports by Susan Heavey and Aakriti Bhalla; Editing by David Evans, Alexander Smith and Marguerita Choy

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