What the OPEC+ Oil Production Cut Means for U.S. Saudi-Relations?
By Maddie Bogdjalian | October 27, 2022
Relations between the United States and Saudi Arabia are currently at their lowest point in the 80 year bilateral relationship between the two nations. This is a result of OPEC oil production cuts. Saudi Arabia is the largest and most profitable OPEC petroleum exporter globally. They export the most oil to the United States and in 2021, Saudi Arabia was the source of 5% of U.S. total petroleum imports and 6% of U.S. crude oil imports. On October 5th, OPEC + (the Organization of the Petroleum Exporting Countries) announced that they would be cutting their oil production target, aiming to reduce oil production by 2 million barrels a day. The world uses roughly 100 million barrels a day, therefore a 2 million production decrease would have significant economic impacts and skyrocket oil prices globally. The Biden administration had objected to oil production cuts due to the harm it would cause to the American economy by skyrocketing gas prices. For Saudi Arabia however, the decision to cut oil production is to protect their economy. Oil prices were $120 a barrel in the spring, but dropped down to $90 a barrel in September at an all time low. The production cuts will raise oil prices and benefit the Saudi economy at the same time bolstering oil prices globally. On October 11th President Biden stated that “there will be consequences" for Saudi Arabia after OPEC+ announced the production cuts. Saudi Arabia’s decision to cut oil production is going to have effects on upcoming midterm elections. The skyrocketing gas prices will not benefit the Biden administration during the elections, straining and changing the dynamics of the U.S.-Saudi relations. The United States and Saudi Arabia are starkly different nations in every way possible, and kept bilateral relations due to mutual interests involving oil. Now, with OPEC production cuts, it is uncertain as to what the relationship between the U.S. and Saudi Arabia will look like.
Edited by Michael D'Ambrosio