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U.S. Senators To Discuss Oil Markets With Saudi Arabia

Two senators from U.S. oil states will hold talks with Saudi officials this Saturday to discuss the oil price situation, Reuters reports, citing unnamed sources.

The same senators have also proposed a bill that, if passed, would see U.S. troops pull out of Saudi Arabia along with U.S.-supplied defense systems, Reuters noted.

North Dakota’s Sen. Kevin Cramer and Alaska’s Dan Sullivan will be talking to the Saudis two days after an expanded OPEC+ meeting that many expect to result in a new production cut agreement, this time involving more producing nations. The U.S., however, has clearly signaled it would not be willing to join any cuts despite equally clear signals from Saudi Arabia and Russia that its participation is a prerequisite for an agreement.

Although last month a member of the Texas railroad commission—the oil state’s energy industry regulator—floated the idea of state-imposed production cuts, the official federal policy line is that the free market will take care of production. However, it seems Washington is relying on free-market mechanisms helped by OPEC+ action, which is in direct opposition to free-market principles.

Details about the scheduled call between Cramer and Sullivan and the Saudi officials remain undisclosed. According to analytic firm ClearView Energy Partners, however, the conversation will most likely come down to a repeat of the threat of withdrawing U.S. troops and military equipment from the Kingdom unless the Saudis agree to reduce their production--another questionable move from a free-market perspective.

OPEC and Russia are scheduled to meet on Thursday to discuss prices and production. Canada and Norway have also been invited, as has the United States. Prices have rebounded ahead of the meeting even with uncertainty around any positive outcome. At the time of writing, Brent was trading at $32.89 a barrel, and West Texas Intermediate was changing hands at $25.16 a barrel, Brent up by 3 percent and WTI up by more than 6 percent.

By Irina Slav for Oilprice.com

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