White House says Opec risks imperilling economic recovery

Opec and its allies declined to accelerate plans to increase oil production, rejecting calls from President Joe Biden to help ease rising crude prices and increasing the odds of a retaliatory move by the US.

The Opec+ group, which has included Russia since 2016, said on Thursday it would stick with a plan formulated this summer of only gradually increasing oil output by 400,000 barrels a day each month, despite warnings of a growing deficit between supply and demand.

Saudi Arabia, Russia and the other members of the cartel have faced repeated pressure from the US and other major oil consumers to increase production faster, but for the third successive month the group has rejected those calls.

The group said in a statement it wanted to “provide clarity to the market at times when other parts of the energy complex outside the boundaries of oil markets are experiencing extreme volatility and instability”.

The announcement will disappoint the US, where Biden has blamed Saudi and Russian supply restraint for soaring petrol prices.

Bob McNally, head of Rapidan Energy Group and a former adviser to the George W Bush White House, said the decision by Opec+ could prompt a response from consumer countries.

“Given the complete rebuff by Opec+ and President Biden’s clear threats to respond, odds of a US if not an International Energy Agency strategic stock release are rising fast along with other retaliatory options,” he said.

Jennifer Granholm, the US energy secretary, said recently that the oil market was “controlled by a cartel” and “that cartel is Opec” — a choice of words that some analysts said could point to forthcoming congressional antitrust legislation targeting the producer group.

Biden also hinted earlier this week that the US could retaliate against Opec if it did not increase supply more quickly than planned, but did not specify how.

Speaking after the announcement of the decision, Opec+ members rejected the characterisation of the group as a cartel.

“What we have seen over the past few months again and again and again is that energy markets must be regulated otherwise things will go astray,” said Prince Abdulaziz bin Salman, Saudi oil minister and Opec chair.

Alexander Novak, Russia’s energy minister, also defended the Opec+ strategy, adding that the monthly meetings meant the group had “all the cards on the table and all the options to react” to future rises in demand.

Under the current plan, Opec+ will add 400,000 b/d every month until the end of 2022, restoring oil supply removed last year after the US cajoled Saudi Arabia and Russia to make record deep cuts to prop up prices devastated by the pandemic.

Suhail Mohamed Al Mazrouei, minister of energy for the United Arab Emirates, said the group had forecast that the planned increases would be sufficient to meet global demand in the first quarter of 2022, as he sought to strike a conciliatory tone.

“It is really crucial for us as global producers to do the right measures addressing the concerns that we have received from many of the countries,” he said. “We can assure you that this group is a responsible group.”

The US Department of Energy did not immediately respond to requests for comment on the decision.

Granholm told the Financial Times last month that the US was considering releasing oil from its strategic stockpile in a bid to cool US oil prices, which at more than $80 a barrel have more than doubled in the past year.

Additional reporting by Myles McCormick in New York