Biden to Leave Mideast With No Immediate Announcement on Oil

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(Bloomberg) --

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President Joe Biden will leave the Middle East this week with no announcements on increasing oil supply before a scheduled meeting of producers next month, people familiar with the matter said.

Biden, who came to office vowing to turn the world’s biggest oil exporter into a “pariah” over the 2018 killing of Washington Post columnist Jamal Khashoggi, said he decided to make the trip to advance US interests and try and curb soaring gasoline prices, which have hurt him politically ahead of mid-term elections.

Biden heads to Saudi Arabia from Israel later on Friday, where he’ll meet with King Salman bin Abdulaziz and his son, Crown Prince Mohammed Bin Salman, the nation’s de-facto ruler. He will meet other leaders from the oil-exporting Persian Gulf on Saturday.

Officials from the US and Saudi governments have been in close contact on the issue of energy markets, and discussions will continue regarding output from members of the OPEC+ cartel, one of the people said, asking not to be named because the deliberations aren’t public.

Biden officials privately say agreements have been reached but no details will be announced until the next scheduled meetings of OPEC+ next month.

“I don’t think you should expect a particular announcement here bilaterally because we believe any further action taken to ensure that there is sufficient energy to protect the health of the global economy will be done in the context of OPEC+,” Jake Sullivan, Biden’s national security advisor, told reporters on the flight to Jeddah.

All OPEC+ members, including Saudi Arabia, are still constrained by oil-production limits agreed at the outset of the Covid-19 pandemic in April 2020. To increase output beyond current quotas would require unanimous agreement.

“The fundamental point is: what could the Saudis really do?” said Alex Booth, head of research at oil consultancy Kpler Ltd. “They need extra oil at home right now, and a unilateral increase would go down very badly with the rest of OPEC+. Biden simply needs to be seen trying to do something on gas prices, even though they’re beyond his control.”

OPEC+ is scheduled to meet next on Aug. 3 to discuss its production policy for September and beyond.

The US benchmark is down about 8% this week, although not for reasons that any US president would welcome. Increased concern over an economic slowdown -- and possible US recession -- has driven the fall in prices.

EXPLAINER: Why US Sees Saudi Arabia Again as Partner, Not Pariah

(Adds Sullivan comment in sixth paragraph.)

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