Opinion | How Biden should respond to Saudi Arabia and OPEC’s oil production cut

At the political core of the decision is a slant by Saudi Arabia and other Gulf states in favor of Russia, which shares their interest in higher oil prices. The move will not only create economic risks for the United States and Europe, but also make it more difficult for them to implement a planned price cap on Russian oil exports in December. All of this can only help Russia continue its flagging war against Ukraine.

There could not be more worrying evidence of just how badly Mr Biden’s efforts earlier this year to mend fences with Saudi Arabia’s de facto ruler, Crown Prince Mohammed bin Salman, have failed. Not only has MBS, as it is known, refused to increase oil production as Mr. Biden wanted. He appears to be redoubling his hostility towards the President in retaliation for his – accurate – portrayal of him as the author of the murder of Post worker Jamal Khashoggi and other human rights violations that make MBS worthy of “outcast” status. The crown prince, announced just a month before a crucial midterm election in which Republicans will blame Mr Biden for soaring US gas prices, is effectively teaming up with Russian President Vladimir Putin to push plunging prices back up .

It looks to all the world like an attempt by MBS to sway internal US politics to the benefit of former President Donald Trump’s party, which has been friendly towards him. Dictatorial and impetuous, MBS is also young – only 37 years old – and will likely dominate the kingdom for many years to come. Democratic congressmen are calling for, and should, a reassessment of the longstanding strategic relationship between the United States and Saudi Arabia in light of this reality.

The United States cannot yield to this pressure. She should push ahead with the plan for a price cap on Russian oil, which will be adjusted to reflect the OPEC Plus production cut. At the same time, in the heat of an election campaign, Congress and the Biden administration should avoid any action that could make matters worse.

A likely counterproductive move would be to limit US exports of petroleum products. Proponents argue that this would protect domestic customers from foreign competition and thus reduce price pressure. Rather, it would penalize Latin American and European countries that buy US products, while reducing incentives for US refiners to expand production for everyone. The net impact could even be higher prices at the pump.

Also unwise would be further releases from the Strategic Petroleum Reserve, which is already at its lowest level since the mid-1980s. Legislation to remove OPEC’s state-owned oil companies’ immunity from subjecting them to US price-fixing lawsuits — known as the NOPEC Act — is worth considering, but it also comes with potential unintended consequences, including legal retaliation against the United States and its businesses.

Another reason to take a deep breath: The real-world impact of the OPEC Plus production cut may be less than the headlines suggest. Despite a production cut of 2 million barrels per day equivalent to 2 percent of global supply, OPEC Plus has already missed daily quotas by as much as 3 million barrels this year, according to the Wall Street Journal.

As the second and third largest crude oil producers in the world, Saudi Arabia and Russia have short-term influence. To reduce this impact and restore US freedom of action in the long term, we must use our domestic fossil fuel stocks and, over time, green energy, as ensured by the climate provisions of the Inflation Reduction Act. Legislation to facilitate the rollout of transmission lines and other critical energy infrastructure is now doubly urgent. And Congress and the states can do more to promote environmental protection, including through increased fuel taxes, which several states have introduced in recent years but still oppose in Congress. Yes, fuel taxes raise prices per gallon, but at least the ultimate destination of the money is the Highway Trust Fund, not Riyadh or Moscow.

Ultimately, the 1973 oil embargo came to the credit of its creators because it prompted the United States and other developed countries to use energy much more efficiently. A wise response can also turn OPEC Plus’ production cut into the ultimate advantage of the United States.