President Joe Biden visited Saudi Arabia almost three weeks ago in the hopes of obtaining additional oil production from OPEC+.
WASHINGTON (AP) — U.S. President Joe Biden visited Saudi Arabia last month in the hopes of obtaining some additional oil production from OPEC+ in the coming weeks, but the cartel and other nations announced a small increase on Wednesday.
The White House responded by emphasizing that what matters is the steady decline in oil and gasoline prices from summer highs, not OPEC+’s decision to pump 100,000 barrels of oil more in September. The decline began on June 14, when the administration announced plans for Biden’s trip to Israel and Saudi Arabia, according to White House press secretary Karine Jean-Pierre.
“The fact is that oil and gas prices are falling,” Jean-Pierre told reporters during her briefing. “As soon as he announced his trip, gas and oil prices began to fall.”
While there may be a link, it’s unclear whether the announced trip caused prices to fall. Oil prices are influenced by a variety of factors, including supply changes, the rate of economic growth, geopolitical events, and extreme weather.
A blue chart behind Jean-Pierre in the briefing room showed a 17% drop in average US gas prices since prices peaked at around $5 a gallon. The current national average, according to AAA, is $4.16 per gallon. Crude oil prices fell to just under $91 per barrel on Wednesday, down from more than $120 in early June.
Nonetheless, gas prices are 31% higher than they were last year, frustrating voters ahead of the midterm elections and raising concerns about an economic downturn in the United States and Europe as central banks try to control inflation.
After Russia, a major energy producer, invaded Ukraine in late February, energy prices skyrocketed. This prompted a flurry of sanctions and other measures at a time when refining capacity was limited and oil production was still recovering from the 2020 pandemic. The Biden administration has urged OPEC+ and domestic producers and refineries to increase output, an effort that the administration attempted to bridge by releasing 1 million barrels per day from the US strategic reserve.
The Ukrainian conflict quickly reshuffled global politics. Natural gas shortages threatened Europe, and Biden’s approval ratings plummeted as gas prices rose. Biden’s trip to Saudi Arabia was somewhat of a U-turn, given that during the presidential campaign in 2019, Biden called the kingdom a “pariah” for the killing of Washington Post contributor Jamal Khashoggi.
However, after meeting with Saudi Crown Prince Mohammed bin Salman in mid-July, Biden raised hopes that a significant amount of supply would enter the market. When asked about the impact of his meeting on oil prices, he said, “You won’t see that for another couple of weeks,” referring to the OPEC oil cartel’s meeting on Wednesday.
In a world that consumes nearly 100 million barrels of oil per day, the additional output amounted to a negligible 0.1% increase. OPEC increased oil production by 648,000 barrels per day in July and August during a previous meeting.
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