President Biden on Friday is expected to privately urge Saudi leaders to ramp up oil production in a bid to curb massive global price spikes and relieve a mounting political headache back home, but there are already signs that his push may have an unintended winner: Russia.
Saudi Arabia in the spring and early summer more than doubled its quarterly imports of Russian oil, according to a Reuters report Thursday, using that Russian fuel to meet its own energy needs at home and subsequently freeing up more Saudi fuel to ship to countries around the world, including the U.S. Riyadh’s major uptick in Russian fuel imports — and its reluctance to embrace the Western condemnation of recent Kremlin moves — have undercut efforts by the U.S. and its NATO allies to punish Moscow for its invasion of Ukraine by choking off revenue from energy exports, which represents the backbone of its economy.
At the same time, Mr. Biden is facing withering criticism at home from Republicans and energy industry leaders who question why the administration appears eager to buy more oil from Saudi Arabia and other Arab nations while refusing to embrace more drilling on American soil.
“President Biden is going halfway around the world looking for a solution found right here at home,” Wyoming Sen. John Barrasso, the ranking Republican on the Senate Energy and Natural Resources Committee, said in a statement Thursday. “Unleashing American energy is the surest way to boost our economy and reduce energy prices. It would also weaken the influence of Russia and China. But the president won’t let us get it out of the ground.”
Instead, Mr. Barrasso argued, Mr. Biden “is begging the Saudis to produce more oil to get him out of a political jam.”
The run-up to the president’s high-stakes meeting with Saudi leaders on Friday has mostly been dominated by human-rights concerns and Mr. Biden’s own past threats to make Riyadh a global “pariah” after Saudi officials were implicated in the 2018 killing of Jamal Khashoggi, a U.S.-based journalist and critic of the kingdom’s rulers.
But global fuel prices and the Russia-Ukraine war’s impact on international energy markets also will be a key topic, both in Friday’s meeting with Saudi officials and in subsequent discussions with Organization of the Petroleum Exporting Countries (OPEC) leaders.
Administration officials have been coy when asked whether Mr. Biden will explicitly push Riyadh and its OPEC partners to boost oil production, but they stressed that “energy security” in the U.S. and around the world will be on the agenda.
“We’re in constant contact not just with producers in the Gulf, but producers globally,” White House National Security Adviser Jake Sullivan told reporters Wednesday. “We’re also working, obviously, on domestic production as well. And those conversations will continue during this trip.”
“The president talked about energy security in Asia, he talked about energy security in Europe. He’ll talk about energy security here,” Mr. Sullivan said.
Buying from Russia
It’s unclear whether Thursday’s news that Saudi Arabia is now relying more on Russian oil imports to power its own economy could impact Mr. Biden’s strategy in his closed-door meetings. From April to June, Saudi Arabia imported about 48,000 barrels per day of Russian fuel, Reuters reported, about twice as much as the previous quarter.
The prospect of the U.S. buying more Saudi oil and subsequently boosting Russia’s own energy export profits — which will help fund its war in Ukraine — would almost surely lead to political blowback for Mr. Biden. The president is also taking heat for allowing American fuel exports to China at a time when domestic gas prices are hovering near $5 per gallon.
Such record prices have again cast a spotlight on Saudi Arabia’s irreplaceable spot among the globe’s top producers of oil, and its unique ability to turn off and turn off the pipelines to move markets and shift prices.
The so-called OPEC+ nations, which includes both Saudi Arabia and Russia, have raised production steadily as the world has come out of the global downturn sparked by the COVID-19 pandemic, but have moved far modestly and methodically than the U.S. and other energy-hungry nations would like.
In 2021, the U.S. led the world in oil production, churning out nearly 19 million barrels per day, which represented about 20% of the global total, according to figures from the federal Energy Information Administration. Saudi Arabia came in second, at about 10.8 million barrels per day, followed closely by Russia at just under 10.8 million, the EIA said. Both nations accounted for about 11% of total international oil production.
The U.S. last year consumed about 19.9 million barrels of oil each day, or about 7.2 billion for the entire year. About 6% of its total crude oil imports came from Saudi Arabia, according to EIA data.
The numbers can fluctuate wildly from month to month. For example, in March of this year the U.S. imported 504,000 barrels of Saudi Arabian crude oil each day. In April, that figure dropped to 413,000, according to the most recent EIA figures.
Meanwhile, American energy industry leaders say Mr. Biden could take steps to quickly increase U.S. production and get more fuel to market, pushing prices down and eliminating the need to enlist the help of the Saudis.
“Instead of meeting with foreign governments to ask them to increase energy production, look to reliable U.S. energy sources here at home,” Mike Sommers, president and CEO of the American Petroleum Institute, said in a video released by the organization Thursday.
“With a tight global market, Washington can no longer ignore the immense potential of American energy,” he said, inviting Mr. Biden to tour U.S. energy production sites across the country.
There is also the question of how much more oil Saudi Arabia can reasonably produce. The kingdom’s decision to dramatically increase its Russian imports suggests that either Riyadh feels it is already nearing peak production or has economic or geopolitical motives for keeping some production capacity held back.
Figures compiled by the website Statista this week show that Saudi Arabia’s daily crude oil production in May was about 10.4 million barrels per day. The maximum production level is about 12 million per day, the website reported, citing OPEC figures and international media reports. Still, it’s not entirely clear whether the Saudis could quickly ramp up to that maximum level, or if they’d even be willing to do so.
“If the Saudis can in fact produce more, they might also not want to. Driving oil production to the edge of what is possible globally holds an inherent risk should another disruption” upend global markets, Katharina Bucholz, a Statista journalist, wrote in an analysis of Saudi oil production this week. “Since that disruption can then not be compensated at all, it could cause an even more drastic jump in oil prices.”
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