The U.S. is considering a series of steps to prevent global oil prices from rising following a decision by oil exporting and producing countries to slash production despite intensive lobbying by the Biden administration.
The grouping known as OPEC+, which includes members of OPEC and allies, including Russia, said earlier this week it would cut production by 2 million barrels a day starting next month, raising worries at the pump.
President Joe Biden told reporters Thursday he was disappointed by group’s decision and called it “shortsighted.”
“And we’re looking at what alternatives we may have,” he said, appearing to confirm reports that the administration might engage with Venezuela’s authoritarian socialist government, which Washington does not recognize.
Experts say lifting economic sanctions that prevent countries such as Venezuela and Iran from exporting oil would bring more supply into the market.
To boost supplies, the administration has released more than 170 million barrels of oil from the U.S. Strategic Petroleum Reserves this year, with an additional 10 million barrels scheduled to be released next month. The administration has also called out energy companies for taking record profits while Americans are struggling.
“Energy companies need to reduce retail prices to reflect the price that they’re paying for the wholesale gas,” Brian Deese, director of the National Economic Council, told reporters earlier this week.
The White House has not confirmed that it is considering a ban on exports of American gas. The oil industry has criticized the idea, saying it would disrupt global energy markets.
Also under consideration are “additional tools and authorities” to reduce OPEC’s control over energy prices, including a bill that would allow the U.S. to sue the oil cartels for antitrust violations.
The No Oil Producing and Exporting Cartels (NOPEC) bill, intended to protect U.S. consumers and businesses from engineered oil spikes, passed a Senate committee in May. It would enable the U.S. to revoke the sovereign immunity that has protected OPEC+ members and their national oil companies from lawsuits.
If signed into law, the U.S. attorney general would gain the option to sue members, such as Saudi Arabia, in federal court.
However, observers say the relationship with Riyadh – a key ally in the Middle East –goes beyond oil.
As the administration considers moves to punish OPEC, they also have to think about the broader bilateral relationship, including the fact that the U.S. is a significant arms provider to Saudi Arabia, said Jonathan Katz, senior fellow with The German Marshall Fund of the United States.
“There are American troops there. There are other issues at play, including Iran,” Katz told VOA.
U.S.-Saudi ties have been fraught for years, said Brian Katulis, senior fellow and vice president of policy at the Middle East Institute, and Riyadh’s support for OPEC+ production cuts sends a negative signal about its willingness to support the broader cause of stability and prosperity in the world.
“It moves the kingdom closer to Russia’s camp at a time when Russia is aligned with Saudi Arabia’s top adversary, Iran,” Katulis told VOA. “The deep production cut has surprised many, and it is being interpreted as an assertive power play in global energy markets. A move like this can produce significant blowback in America, Europe and parts of Asia against Saudi Arabia at a time when many of these countries have strong doubts and concerns about the kingdom.”
The decision by OPEC+ comes at a sensitive juncture for Biden, with midterm elections weeks away and Democrats hoping to cling to control of Congress. It may prove to undo the work of the administration in keeping gas prices in check despite the ongoing war in Ukraine.
Before the announcement, gas prices in the U.S. had decreased by more than $1 per gallon (26 cents a liter) from earlier this year.
Oil prices are still below $90 a barrel, down from $122 in June, but soaring gas prices have contributed to a near 40-year-high inflation rate — a key issue in the November midterms.
“The increase or decrease in gas prices tends to be sort of that signal for people that the economy’s doing good or not doing good. And then, as a consequence, if they like or dislike President Biden,” Ipsos Senior Vice President Chris Jackson, told VOA.
Biden remains deeply unpopular. Only four in 10 Americans approve of his job performance, down from 41% last week, according to the latest Reuters/Ipsos poll. This recent drop is nearing its all-time low of 36% in May and June.
“Looking back over the last six years, we do see that a president with about a 40% approval rating like President Biden is currently, his party has never won more seats than they currently have in a midterm election. Indeed, on average, they lose about 30,” Jackson said.