The global oil market is in a crisis — resulting in those jettisoned gas prices the world has seen as of late. In an attempt to smooth things over in improving the oil market and Saudi Arabia relations, Joe Biden is making his first presidential trip this week to the Middle East.
According to Financial Times, relations between the U.S. and Saudi Arabia reached historic lows in the wake of the murder of journalist Jamal Khashoggi in 2018 and the war in Yemin. The President has threatened to make the country a pariah state.
Now, with the war in Ukraine that has sent oil prices astronomically high, there is a window of opportunity to mend relations between the U.S. and the Saudis.
Prior to his election in 2020, Biden had promised to reassess relations with the Gulf state. In a pre-emptive defense of his visit, Biden wrote in the Washington Post at the weekend that “from the start, my aim was to reorient — but not rupture — relations with a country that’s been a strategic partner for 80 years”.
[M]uch of the attention is on this weekend’s meeting in Jeddah with Saudi Arabia’s de facto leader Crown Prince Mohammed bin Salman. The visit, where he will attend a summit of Arab leaders, will determine whether Biden can secure progress on oil and regional relations that he needs to justify his U-turn on Saudi Arabia to his critics, including those from the progressive wing of the Democratic party.
In his opinion column, Biden said that Saudi Arabia was “working with my experts to help stabilize oil markets with other OPEC producers”. Analysts expect that Saudi Arabia, the world’s top crude producer, will this week agree to at least some modest increases after the Opec+ agreement, which includes Opec members such as Saudi Arabia as well as Russia, ends in September.
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Right now, the U.S. is not expecting any sort of specific announcement on oil production at the summit. It’ll be some time before we see the impact of this meeting… especially at the gas pumps. The national average price for a gallon of regular gas now sits at $4.66, according to AAA. That’s down considerably from the record high of $5.02 set on June 14, but it’s still much higher than what the average American would deem acceptable.
Crude oil prices are also falling right now. At the time of publication, Crude Oil WTI was sitting around$96.32. That’s down from a peak of around $123 set back in March of this year.