The White House’s chief energy adviser, Amos Hochstein, has expressed confidence in Arab oil producers’ commitment to ensuring energy stability, despite mounting anger in the Middle East over Israel’s actions in Gaza. In an interview with the Financial Times, Hochstein emphasized the strong collaboration between the United States and Gulf producers, including Saudi Arabia, over the past two years.
While acknowledging the occasional weaponization of oil throughout history, Hochstein noted that so far, oil has not been used as a geopolitical tool. Despite ongoing conflicts in Russia and the Middle East, oil prices remain relatively stable, indicating effective management of potential energy shocks. Nevertheless, Hochstein emphasized the need for continued vigilance in navigating this evolving situation. He highlighted the strong coordination between producers and consumers in recent years to preempt any disruptions to global energy supplies.
Although Iran has called for an embargo in protest of Israel’s military tactics in Gaza, the leading Gulf states in the OPEC+ cartel, including Saudi Arabia, have rejected such calls. However, the recent dip in oil prices and growing discontent among member countries over the situation in Gaza could potentially lead to further cuts in oil supplies. Ahead of the OPEC+ meeting in Vienna on November 26, discussions around prolonging voluntary production cuts and reducing supplies by up to 1 million barrels a day may emerge.
Prince Abdulaziz bin Salman, Saudi Arabia’s energy minister, has been instrumental in leading the OPEC+ group’s production cuts despite facing pushback from the White House. While no final decisions have been made, Saudi Arabia is expected to prioritize market conditions over political considerations. Abdulaziz has criticized hedge funds betting against oil, cautioning that a small surplus may be likely next year due to weak global economic conditions and increased non-OPEC supplies.
The ongoing conflict between Israel and Hamas in Gaza has strained relations between the Biden administration and its Arab allies. However, Hochstein refrained from commenting on the possibility of OPEC+ extending production cuts or the US’s conversations with Saudi Arabia and other producers. He did emphasize the strong understanding and cooperation between key oil-producing regions, reiterating the importance of working together to prevent destabilization.
Despite the recent setbacks in US-Saudi relations, there remains a possibility of future collaboration, particularly in light of previous negotiations between the two countries regarding the normalization of ties with Israel. While the Israel-Hamas conflict disrupted those talks, both Saudi and US officials have hinted at the potential for resumed negotiations in the long term.
FAQs
Q: Are Arab oil producers considering using oil as a geopolitical weapon?
A: Amos Hochstein, the White House’s chief energy adviser, believes that while there have been instances of oil being weaponized in the past, there is currently no indication of Arab oil producers employing such tactics.
Q: Will the conflict between Israel and Hamas impact oil production?
A: While calls for an embargo by Iran and rising tensions in the Middle East could potentially lead to further cuts in oil supplies, no final decisions have been made yet.
Q: Are the US and Saudi Arabia in regular contact regarding energy-related issues?
A: According to Hochstein, the US has maintained consistent and regular contact with producers in the US as well as the Middle East over the past two years, highlighting strong cooperation between the two regions.
Q: How have relations between the US and Saudi Arabia evolved under the Biden administration?
A: Relations between the two countries were initially strained, but there has been recent improvement as discussions around normalizing ties with Israel and potential collaboration on nuclear power ambitions were explored. The Israel-Hamas conflict, however, disrupted this process.