American drivers could face another increase in gas prices as the OPEC+ alliance announced it is cutting oil production by up to two million barrels a day in what could end up being a massive setback for the Biden administration.
Energy ministers from the OPEC cartel, whose leading member is Saudi Arabia, and allied non-members including Russia are meeting in person at the group’s Vienna headquarters for the first time since early 2020.
The announced production cutback on Tuesday is the largest since the start of the COVID-19 pandemic.
It comes after oil barrel prices dropped roughly a quarter in just three months, now around $90, amid fears of a looming global recession.
The announcement’s effect on the pumps is not yet certain, but the decision as left the Biden administration scrambling to avoid a ‘total disaster’ according to a CNN report.
OPEC’s decision after their Wednesday meeting could force prices at the pump back up after the White House celebrated them falling at a record pace this summer. They have already begun to inch back up in recent weeks.
But a sudden spike would be an especially concerning setback with the November midterm elections just over a month away.
One official told CNN that the White House is ‘having a spasm and panicking’ over the potential outcome.
The White House is ‘having a spasm and panicking’ over OPEC’s expected decision to cut oil production, an unnamed official told CNN
High level officials across economic and foreign policy have reportedly been lobbying allies in the Middle East to vote against cutting production.
DailyMail.com has reached out to the White House National Security Council for comment.
Press Secretary Karine Jean-Pierre was pressed on Tuesday about the White House’s earlier victory laps over falling gas prices, which has translated into comparative silence as they creep up again.
‘You said the president was responsible for gas prices coming down. Is the president responsible for gas prices going up?’ Fox News reporter Peter Doocy asked at Jean-Pierre’s regular press briefing.
She answered, ‘So, it’s a lot more nuanced than that.’
Jean-Pierre pointed out that gas prices have risen across the globe and chalked the spikes up to ‘the [COVID-19] pandemic and Putin’s war’ in Ukraine.
‘We understand there is more work to do, we’ve never said we are done here,’ the Biden official said.
‘But we have seen, the reality is, we have seen the fastest decline in gasoline prices in over a decade. That’s because of what this president has done.’
A production cut could benefit Russia by establishing higher prices ahead of a European Union ban on most Russian oil imports, a sanction over the invasion of Ukraine that takes effect at the end of the year, analysts at Commerzbank say.
Oil prices surged this summer as markets worried about the loss of Russian supplies from sanctions over the war in Ukraine, but they slipped as fears about recessions in major economies and China’s COVID-19 restrictions weighed on demand for crude.
It’s unclear how much impact a production cut would have on oil prices – and thus gasoline prices – because members are already unable to meet the quotas set by OPEC+.
Yet Saudi Arabia may be unwilling to strain its relationship with Russia even if the world’s largest oil exporter had any reservations about cutbacks and has recently has drawn leaders from Biden to German Chancellor Olaf Scholz to talk about energy supplies.
The American president’s meeting with Saudi Arabian Crown Prince Mohammed Bin Salman drew ire from Republicans back at home.
GOP lawmakers accused Biden of ‘begging’ for oil from a known human rights abuser while hammering him for not expanding
The Commerzbank analysts said a small trim would likely see oil prices fall further, while the group would need to remove at least 500,000 barrels day from the market to bolster prices.
Such a production cut ‘would undoubtedly signal to the market the determination and resolve of the cartel to support oil prices,’ said UniCredit economist Edoardo Campanella. But supply would drop by less than announced.
‘If the group cuts target production by 1 million barrels per day, actual output would likely drop by about 550,000 barrels per day – as countries like Russia or Nigeria that are producing below quota would see their formal target decline but remaining above what they can currently produce,’ Campanella said.
At its last meeting in September, the group reduced the amount of oil it produces by 100,000 barrels a day in October. That token cut didn’t do much to boost lower oil prices, but it put markets on notice that OPEC+ was willing to act if prices kept falling.
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