How the Saudis embarrassed Biden over oil prices

First, it should be noted that yesterday’s decision cancels out the 100,000 barrel per day increase OPEC+ had settled on in early August, two weeks after President Biden traveled to Saudi Arabia to fist-bump Crown Prince Mohammed bin Salman. That July trip to Jeddah was the most controversial of Biden’s tenure thus far, leading human rights activists to blast him for caving on his principles. Biden’s op-ed in the Washington Post, where he sought to explain why his visit to the Middle East was necessary, did little to quell the uproar. Yet the president did at least walk away with a commitment from the Saudis to boost production, even if it was a far smaller increase than he’d hoped for. With the latest decision, however, even that small increase is dead until further notice. It’s yet more proof that Riyadh, like oil producers everywhere, makes oil policy based on its own interests.

Second, the oil reductions are a reminder that the world’s traditional crude suppliers still wield an enormous amount of leverage. Washington may no longer rely on the Middle East for the black stuff to the extent it did in the 1990s and early 2000s, but OPEC is and will remain the indisputable heavyweight in world oil markets. As long as industry depends on crude to function, OPEC will continue to possess influence and use it, either to pad the budgets of its member states or to price competitors out of the market (Aramco, the Saudi state oil giant, has tried to bankrupt US shale companies on multiple occasions). About 80 percent of the world’s proven oil reserves are located in OPEC member states, and the cartel is responsible for more than half of the world’s output. Put simply: oil is power.