Advisers to U.S. President Joe Biden are considering a possible visit to Saudi Arabia to plead with the world's largest oil exporter to boost its oil production as prices surge amid the Russian invasion of Ukraine, Axios reported on Sunday.
The United States is considering a ban on imports of Russian oil and is scrambling to secure more global oil supply in the meantime.
Unlike his predecessor Donald Trump, President Biden has criticized Saudi Arabia over its human rights track record and the killing of Washington Post columnist Jamal Khashoggi.
Since oil prices started rising to above $80 a barrel, the U.S. Administration has pleaded several times with the OPEC+ group, led by Saudi Arabia and Russia, to increase supply faster than the current timetable of 400,000 bpd increases per month.
Last week, OPEC+ decided to rubberstamp another 400,000 bpd increase in its collective oil production in April, despite soaring oil prices after a key member of the pact, Russia, invaded Ukraine.
The issue with ramping up production more than planned-even if OPEC+ wanted to-is that only Saudi Arabia and the UAE actually have the capacity to do so, but a major bump in production from those two influential OPEC members would mean critically thin spare production capacity globally.
Asked to comment on the report of a possible visit to Saudi Arabia, a spokesperson from the White House told Axios, "We don't have any international travel to announce at this time, and a lot of this is premature speculation."
The U.S. is also reportedly talking to Venezuela while it considers a ban on Russian oil.
Amid those reports of Washington approaching Saudi Arabia and Venezuela, Alberta's top officials said on Sunday that Canadian oil could be the alternative the U.S. is seeking for its supply.
Alberta's Premier Jason Kenney said that Canada's oil-producing province would be delighted to welcome a visit from President Biden, as the one reportedly being considered to Saudi Arabia.
Kenney noted that in a visit by President Biden to Alberta, "We could discuss how to ship nearly 1 million barrels of day of responsibly produced energy every day from the USA's closest friend and ally! All it would take is his approval for Keystone XL. Easy."
By Charles Kennedy for Oilprice.com
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Comments
OPEC+ has limited spare oil production capacity. Therefore, it will only raise its production beyond the 400,000 barrels a day (b/d) monthly if the market becomes imbalanced. This isn’t yet the case since the market isn’t yet short of oil supplies. The rise in prices is the result of the Ukraine conflict and not the result of an imbalanced market.
A US possible approach to Venezuela to raise production or to buy Venezuela crude will also fail. Venezuela can’t raise its production beyond the current 1.2 mbd because of US sanctions against it and lack of investments. The bulk of its produced oil goes to China to pay for the loans China has extended to it. Moreover, Venezuela won’t supply the United States with any crude even if it can until the all the sanctions against it are lifted.
Canada can’t export more oil to the United States beyond its current level of exports.
The only way the United States could prevent crude oil prices from skyrocketing in the current situation is to forget about imposing sanctions on Russian oil exports.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London
Seems a bit of a perfect storm on the supply side. It might be that we will need to make reducing demand as work as well as possible. I think that will happen through a combination of high petroleum prices and civic duty.
The effect of high prices on demand is self-explanatory. On the subject of civic duty, it stems from a combination of reducing pollution and voting, by controlling and directing spending, against world leaders who would invade countries based on manufacturing false pretexts.