The White House is up in arms to try and prevent a potentially major production cut in OPEC+ just a month before midterm elections when the current administration least needs higher prices at the pump.
According to a CNN report, all available human resources in the administration have been mobilized, with the White House “having a spasm and panicking,” per one unnamed official.
According to the latest reports on OPEC+, the extended cartel is considering a production cut as deep as 2 million barrels daily. This would be the biggest cut in production since the first pandemic year when lockdowns destroyed demand.
“It is hard to overstate how anxious the Biden administration is about a potential resurgence in oil prices,” Bob McNally, of Rapidan Energy, told Bloomberg ahead of the OPEC+ meeting, which is taking place later today in Vienna.
“A large OPEC+ cut would antagonize the White House though officials may wait to see how prices respond afterward before pulling the trigger on policy responses.”
Indeed, CNN reports that some of the talking points drafted in a state of urgency by the White House had suggested the OPEC+ production cut is viewed as “a hostile act”.
Figures such as Amos Hochstein, Janet Yellen, and BrettMcGurk have been tasked with making the case for no cuts with Gulf nations, with the CNN reporting noting that the Treasury Secretary’s talking points would focus on potential reputational damage in the West for the Gulf OPEC members that support the cut.
“There is great political risk to your reputation and relations with the United States and the west if you move forward,” CNN cited a talking points draft as saying.
The main argument that is being put forward in the lobbying effort, however, is the one about the adverse effect tighter oil supply would have on the global economy right now.
By Irina Slav for Oilprice.com
More Top Reads From Oilprice.com: