Joe Biden’s presidency will hopefully not interfere with OPEC+ actions taken to rebalance oil markets, Russian Deputy Prime Minister and former Energy Minister Alexander Novak said this week.
“We can see that the new U.S. administration is making statements contradictory to the country’s policy from the last four years,” Novak said, as quoted by RT, adding, “As far as we can see there will be more discussion of climate topics. This could affect U.S. oil production.”
“We hope that the changes to the policy of the U.S. administration will not have an impact on the joint actions, which, first of all, are designed to play a positive role for the global economy and energy markets,” Novak also said.
The president-elect has prioritized climate action and has threatened a ban on oil and gas drilling on federal land, which caused a vocal reaction from the industry, with the American Petroleum Institute pledging to use “every tool at its disposal” to fight this plan.
Biden has also promised to end fossil fuel and mining subsidies, which would be difficult to do with the current make-up of Congress as well as opposition from within the Democratic Party. Instituting a drilling ban for federal lands will also face challenges from opponents, but, interestingly enough, some in the oil industry are not that worried: the President cannot ban drilling on private lands, and this is where most of U.S. drilling comes from.
If anything, a Biden presidency should be positive news for OPEC+ on the face of it and with his making climate change a top priority. However, Biden has already declared Russia the biggest threat for the United States and has suggested a rethink of relations with Saudi Arabia, meaning he would be hardly willing to make any moves that would benefit either of the two countries.
By Irina Slav for Oilprice.com
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Under Joe Biden, the United States is expected to return to policies based on mutual interests and cooperation and grounded in international institutions.
This means he won’t interfere with the pivotal efforts of OPEC+ to stabilize the global oil market and oil prices. Biden’s energy policy will have added emphasis on clean energy.
While President-elect Biden has greener goals for US energy, he will still ensure that no one will undermine the US shale oil industry on his watch for two reasons. The first is its importance to the United States economically and geopolitically. However, he may increase regulation of the sector by limiting methane emissions and fracking on federal land.
The second reason is that any reduction in US oil production will translate into higher crude oil imports from the current 9 million barrels a day (mbd) to 12-13 mbd in the coming years and this will deepen US budget deficit.
Moreover, a Biden administration would likely see natural gas as an important bridge to cleaner fuels and a reduction in coal usage and also an important export.
President-elect Biden says he will re-join the Paris Climate Agreement, which is one of the international accords that Trump dumped. While Trump saw tackling global warming as a threat to the economy, a Biden administration would push greener fuels and promote an ambitious $2 tn plan to cut emissions.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London