The White House is up in arms trying to prevent a potentially major OPEC+ production cut just a month before the 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, and the White House is “convulsing and panicking,” according to an unnamed official.
According to the latest reports on OPEC+, the expanded cartel is considering a production cut as deep as 2 million barrels per day. This would be the biggest cut in production since the first year of the pandemic when shutdowns destroyed demand.
“It’s 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 takes place later today in Vienna.
“A big OPEC+ cut would antagonize the White House, though officials may wait to see how prices react afterward before pulling the trigger on policy responses.”
Indeed, CNN reports that some of the talking points drafted in a state of emergency by the White House had suggested that the OPEC+ production cut is seen as “a hostile act”.
The likes of Amos Hochstein, Janet Yellen and BrettMcGurk have been tasked with arguing for no cuts with the Gulf nations, and CNN reports that the Treasury secretary’s talking points will focus on potential reputational damage in the West for Gulf OPEC members. which supports the cut.
“There is great political risk to your reputation and your relationship with the US and the West if you go ahead,” CNN quoted a draft of the talking points as saying.
However, the main argument put forward in the lobbying work is the negative effect a tighter oil supply will have on the global economy right now.
By Irina Slav for Oilprice.com
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