Democrat President Joe Biden’s White House is reportedly “panicking” that Saudi Arabia will cut oil production.
When Saudia Arabia played games with President Donald Trump, he got tough and gave them an ultimatum.
Trump warned there would be no more military aid, no more contract soldiers, and no more spare parts for their aviation and defense industry.
The Saudis caved within minutes.
Now they are playing games with Biden and, according to CNN, the “White House is panicking” that the Saudis will cut oil production.
Should they cut production, it would raise gas prices for American consumers.
Should the Saudis cut oil production, as they are expected to do so, Biden will need to take drastic action or he will look weak on the world stage.
During Tuesday’s broadcast of CNN’s “The Lead,” CNN Senior National Security Correspondent Alex Marquardt said that, according to a “U.S. official,” the Biden admin is scrambling behind the scenes
“The White House, in fact, is panicking, that this is something that they desperately do not want to happen,” Marquardt said.
“Cutting oil production means higher oil prices, it means higher gas prices.
“That, of course, is something that the Biden administration does not want to happen right now.
“So, tomorrow, there’s this meeting of the oil-producing countries, this cartel known as OPEC.
“It is ostensibly led by Saudi Arabia.
“Russia is also a member.
“The United States is not a member.
“And what we have learned, myself and our colleagues Natasha Bertrand and Phil Mattingly, is that there is this furious, last-ditch, wide-scale effort to lobby the OPEC-plus oil-producing countries to not cut oil production, that senior members of the Biden administration are reaching out to members of the cartel, including Saudi Arabia, Kuwait, and the United Arab Emirates.
“The cartel could cut as much as 1 million barrels a day in production, that would be the biggest cut since the beginning of the pandemic.
“Now, this effort is being led by the top Biden administration official for energy, Amos Hochstein.
“They’ve also enlisted the top White House official for the Middle East, Brett McGurk,” Marquardt continued.
“But interestingly, they’ve also — just to show you how widespread this is — reached out to the Treasury Secretary, Janet Yellen, asking her to reach out to counterparts around the world.
“And we actually got talking points that the White House sent to Treasury that have very blunt language suggesting that Yellen say some of this to her counterparts.
“They say that this would be a ‘total disaster’ it would be seen as a ‘hostile act’ against the United States.
“This is very blunt language,” he said.
“The White House says that these were draft talking points and not used. But it does give insight into how nervous they are, Jake.”
Democrat Senator Chris Murphy also weighed in on the situation.
“I think it is a mistake on their part. And I think it’s time for a wholesale re-revaluation of the U.S. alliance with Saudi Arabia,” Murphy told CNBC.
“I just don’t know what the point of the current alliance is, if we have to work so hard to get the Saudis to do the right thing,” he added.
Officials across the administration’s economic and foreign policy teams have also been involved with reaching out to OPEC governments as part of the latest effort to stave off a production cut.
The White House has asked Treasury Secretary Janet Yellen to make the case personally to some Gulf state finance ministers, including from Kuwait and the UAE, and try to convince them that a production cut would be extremely damaging to the global economy.
The US has argued that in the long-run a cut in oil production would create more downward pressure on prices – the opposite of what a significant cut would be designed to accomplish.
Their logic is that “cutting right now would increase risks of inflation,” lead to higher interest rates and ultimately a greater risk of recession.
“There is great political risk to your reputation and relations with the United States and the west if you move forward,” the White House draft talking points suggested Yellen communicate to her foreign counterparts.
A senior US official acknowledged that the administration has been lobbying the Saudi-led coalition for weeks to try to convince them not to cut oil production.