In what constitutes another standoff between the White House and OPEC+ over oil production and prices, this time more visibly under the administration of President Joe Biden, who has been advocating green energy and renewables since his presidential campaign, Washington made a strong call to the oil alliance to raise its overall production further amid high gasoline prices across the US and showing that still, it depends on foreign oil supplies, traditionally from its Gulf allies but now ramping up oil imports from Russia, despite geopolitical tensions with Moscow.
This move comes seemingly as a corollary by the Biden administration since its arrival to the White House to a series of recent steps targeting the local oil sector such as the definitive elimination of the Keystone XL pipeline (supposed to carry oil from Canada to the US) and a ban on further oil drilling leases, altogether in what’s been a tough time for the US oil and gas sector as a consequence of the financial problems left so far by the coronavirus pandemic during last year and what’s unfolding this year in the global oil markets, but especially in the domestic oil sector.
Already, the OPEC+ alliance made clear on this that it is keeping its strategy of adding an extra 400,000 barrels per day as part of a recent deal reached, although due to growing uncertainties over the potential medium- and long-term impact of the new Delta variant of the virus sweeping across key spots in Asia and the US on global oil demand, the group might opt to reverse this additional production depending on the evolution of the Delta strain.
At the same time, domestically, this attention call by the US government to OPEC+ comes after the recent release of the CPI (consumer price index) with inflation in the US at 5.4% being a top concern with gasoline prices hovering over $3 a gallon and an ongoing $3.5 trillion infrastructure plan altogether being top concerns for the Biden White House as the US struggles between a gradual full-fledged post-pandemic economic recovery and an alarming rise of cases of the Delta strain in key states like Florida and Texas, which could deal another blow to the US economy.
Geopolitically speaking, this move from Biden comes amid uncertainties over any resumption of the halted nuclear talks process with Iran and any potential sanctions lifting by the White House against Iranian oil as the government of Ebrahim Raeisi is established, coupled with rising exports of oil from Saudi Arabia and other Gulf states to China, India, South Korea or Japan, along with rising tensions in other spots in the region amid recently repeated oil tanker hijacking incidents as part of an unfolding clash between Israel and Iran, with ongoing permanent frictions with Moscow, highlighting this way the dangers of overdependence on foreign oil imports especially when the US has been experiencing its best years regarding its hydrocarbon sector.
After this recent move, different criticisms came rejecting it such as from Alberta, Canada authorities or the Texas Railroad Commission, both emphasizing the need to reactivate the Keystone XL pipeline and to support actively local US oil producers rather than exposing the country to the always present vulnerabilities of the excessive dependence on foreign oil imports, specifically from such a volatile and risky region like the Persian Gulf.
Therefore, it remains to be seen if we are going to have another chapter of the legislative NOPEC (a bill introduced last April in the US House of Representatives which would bring antitrust lawsuits against oil members of OPEC) which has been from time to time wielded by the US specifically as some sort of a threat in moments of high gasoline prices in the US and with OPEC+ seemingly with a recent coordinated and disciplined control of oil markets and to what extent Washington still has the traditional leverage and influence inside the organization, especially with its Gulf state allies.
*Opinions expressed in this article are the author’s own and do not necessarily reflect the editorial policy of Anadolu Agency.
Source: Anadolu Agency