The White House and Saudi Arabia are embroiled in a public fight over oil production
LEILA FADEL, HOST:
The relationship between the United States and Saudi Arabia is a complicated one. For more than seven decades, the two countries have maintained a close relationship, largely centered on oil. But after the Saudis urged OPEC+ to slash global oil production, the White House and the kingdom are fighting over oil in public. President Biden is warning there will be consequences for Saudi Arabia. NPR White House correspondent Asma Khalid has been digging into this story and joins us now. Hi.
ASMA KHALID, BYLINE: Hi there, Leila.
FADEL: So, Asma, walk us back. I remember you were on that trip President Biden took to Saudi Arabia this summer - controversial trip because of the human rights record under Saudi Crown Prince Mohammed bin Salman. But the visit happened. There was that fist bump. So walk us through how we got here.
KHALID: Well, after that trip, Saudi accelerated its production of oil. And in fact, it was producing a near-record amount, which helped bring down those high gas prices we all remember seeing earlier this year. And I talked with a senior Biden administration official who spoke on the condition of anonymity to candidly describe private conversations at the time. So the Saudis were telling U.S. officials that the kingdom was prepared to keep production high through the end of the year. But when global oil prices started plunging, the Saudis got nervous about market volatility. And the official told me that led to a 2 1/2-hour phone conversation between U.S. officials and the Saudi oil minister and the Saudi finance minister. They just had a fundamental disagreement over the state of the world economy and the role that oil prices play. They argued that an oil cut would increase inflationary pressures. But still, last week, OPEC+ announced it would cut production by 2 million barrels a day. And, you know, this is a group that includes Russia, which wants higher oil prices because it's fighting a very expensive war in Ukraine.
FADEL: OK. But the Biden White House has accused Saudi Arabia of helping Russia with this move. Is that really what's actually happening here?
KHALID: Well, the Saudi foreign ministry issued a statement saying OPEC+ decisions are made through, quote, "consensus" and "based purely on economic considerations." The Saudis are also claiming that the U.S. suggested the cuts be delayed by a month, which is when OPEC next meets. But it is also after the midterm elections. And look, Leila, this all comes at a time when many Americans are anxious already about rising prices.
KHALID: Gas prices going up as a result of this news just as people are beginning to vote could have consequences. And Republicans have been eager to campaign on inflation. I asked Bob McNally about all of this. He's been watching the oil markets for years, initially in the Bush administration and now as the president of Rapidan Energy Group. He told me a country like Saudi Arabia is hyperfocused on avoiding low oil prices.
BOB MCNALLY: That is all they care about. Had we not even had the Russian invasion of Ukraine, had we not even had the tiff with President Biden, I still believe they would have cut production because of that free fall in oil prices. But the optics of it were terrible because it does coincide with the proximity of the U.S. elections, with inflation concerns and with the war - Russia's war in Ukraine, with Russia playing a high-profile role.
FADEL: OK. So has the White House been receptive to the Saudi argument that this decision was about the bottom line?
KHALID: No, Leila, they say there was no economic reason to do this. They say they told the Saudis, you could easily wait till the next meeting to see how the situation develops. The White House also says no matter how the Saudis try to spin this, ultimately it will increase revenues for Russian President Vladimir Putin and blunt the effectiveness of sanctions. Here's National Security Council spokesman John Kirby yesterday.
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JOHN KIRBY: Bottom line is, we don't want to see any nation helping Russia prosecute this war, whether that's moral support, military support or economic support. And the decision that OPEC+ came out with this week was certainly economic support. And I would argue it also fell into the category of moral and military support because it allows him to continue to fund his war-making machine. And it certainly gave him - Mr. Putin a sense of comfort here.
KHALID: And Leila, this really is an unusually public disagreement we're seeing between the Saudis and the Americans.
FADEL: Yeah, I mean, the White House even said that as a result of this decision, it's reevaluating its relationship with Riyadh. What does that actually mean?
KHALID: Well, President Biden's going to be talking to members of Congress. Senator Menendez, who chairs the Senate Foreign Relations Committee, wants to freeze arms sales to Saudi. And Bob McNally, the energy expert I mentioned earlier, says it's going to be important to see what the Saudis do if the world needs more oil this winter to offset the big loss of Russian supply. That could be a key turning point.
FADEL: NPR's Asma Khalid, thank you.
KHALID: My pleasure. Transcript provided by NPR, Copyright NPR.