Two officials say no final US decision has yet been made — simply because it is intended to be coordinated with other countries in what would be a unique effort — but they hope it will be finalized by late Monday evening. When asked about a possible decision, White House press secretary Jen Psaki said she “didn’t want to prejudge any trial.”
“I’m not looking forward to this,” Psaki said. “But I will say, of course, we will continue regardless of the pressure on OPEC to ensure supply meets demand.”
According to the White House schedule, the president will make comments Tuesday afternoon “about the economy and lowering prices for the American people” just hours before he leaves for Nantucket off the coast of Massachusetts for a Thanksgiving holiday.
But the option remained on the table as Biden had few, as officials believed coordination with other countries could potentially have more impact.
The government has faced reluctance from OPEC+ to ramp up oil production to meet rising demand. Coordination with the other countries would be an attempt to undermine the cartel’s control of the market.
“The thought was, we can do this alone, or we can do it internationally — and the latter would be much more effective, especially when it comes to sending a message to the Saudis,” said a senior official involved in the discussions. used to be.
In particular, Biden and his aides have pressured Beijing to release its reserves, arguing that it is as much in their best interest as the United States to try to stabilize oil prices, officials familiar with the matter said. . China has indicated in recent days that it is moving towards such a release, which one Biden official described as a “major victory” for the government.
“China is in a difficult position,” said Bob McNally, president of energy consultancy Rapidan Energy. “It’s a balancing act. China sees its future as linked to the Persian Gulf. They want investment. They want ties. They don’t want to anger the authorities there. But they also want to make Biden happy. The real threat to Xi Jinping’s coup would be result of an economic collapse due to an escalation of tensions with the United States.”
A coordinated release would also show Saudi Arabia and OPEC that the US meant it when it warned it would act if OPEC didn’t, the officials said.
Biden officials have warned the Saudis for weeks that the US would find alternative solutions if the price of crude oil exceeded $85 a barrel, officials said late last month. But Saudi Arabia has remained steadfast in refusing to increase production and has priced in — erroneously, US officials say – the possibility of the US reaching a nuclear deal with Iran, two US officials said. The Saudis’ concern is that sanctions against Iran would then be rolled back, allowing the country to ramp up its oil production and compete with OPEC+.
The political fallout from the high costs has prompted the White House to make the energy issue a top priority in recent weeks, sources said. Ron Klain, the White House chief of staff across the country, became so concerned at one point that he suggested taking the dramatic step of halting US oil exports to cut costs, an official said. That’s despite the fact that Wall Street banks and industry experts have warned that banning oil exports would backfire, driving gasoline prices higher instead of lower.
But the White House has seen the energy crisis as a matter of national security as well as an economic and political issue, as evidenced by the composition of the group that has worked extensively on it in recent weeks.
A small group of top advisers to Biden, led by National Security Adviser Jake Sullivan and director of the National Economic Council, Brian Deese, have met regularly to try to determine how best to combat rising prices. Sullivan and his deputy, Jon Finer, oversaw meetings with Deese, senior energy adviser Amos Hochstein and Energy Secretary Jennifer Granholm and her deputy, David Turk.
Senior National Security Council officials Brett McGurk and Kurt Campbell have also played an important supporting role, enlisting their counterparts in the Middle East and Asia Pacific to try to encourage greater cooperation with the US on this issue, it said. officials.
Domestic oil producers have told Biden they would be willing to ramp up production if asked. But the White House has been wary of the views of the president and his aides pushing for more domestic oil production in the footsteps of the major UN climate summit COP26, where Biden promised the US would “lead by example” on the matter. of clean energy initiatives.
Government officials now believe they can negotiate, at least in the short term, an important deal with China, Japan, India and South Korea that would not involve halting U.S. exports or asking domestic oil producers to increase the offer.
Still, releasing barrels from emergency reserves isn’t a long-term solution, as it won’t resolve the underlying supply-demand mismatch, experts say. Emergency reserves hold a finite amount of oil – and those barrels are typically reserved for supply shocks, such as natural disasters or war, and not for rising demand from an economic recovery.
Goldman Sachs told customers late last week that a coordinated release would only provide “a short-term solution to a structural shortfall” in the oil market. And the Wall Street bank argued that a coordinated release is now “fully priced in,” meaning the market impact has already happened.
But even the threat of tapping the SPR and letting other countries do the same has already successfully helped drive oil prices down, government officials said.